You can apply and get a personal loan with no credit history. But here’s the kicker – you may be forced to part with expensive loan charges and unfriendly repayment terms. However, there are still steps you could take to rebuild your credit profile and access endless loan products.
Credit builder loans, for instance, are meant for that. In this article, we’ll review additional tips you can take to build your credit profile before applying for a loan. We’ll also cover additional borrowing options you could explore without a credit history.
These could come in handy in taking care of medical bills, paying rent, sorting out school fees, or sponsoring a vacation. We’ve also singled out some of the top lenders charging affordable rates. Take a look;
Not having a credit history doesn’t always mean a borrower has a poor credit score. Most people don’t have a credit history because they haven’t had any major consumer credit bureau report any of their financial histories.
New borrowers also tend to have no financial history since they’ve never taken any loans. Similarly, new immigrants to the US also have to build their credit scores from scratch.
This is the same case with those who’ve just attained the age of majority – 18 years in most states.
Some also have very few details about them known by consumer credit bureaus that may not be enough to assign them a score.
This score is what gives a lender a snapshot of how a borrower pays his/her loans and credit card debts.
Most lenders, before making the final decision on whether or not to offer you a loan, review your credit reports. That’s why it’s hard to qualify for a loan without a credit history.
However, personal loans with no credit history can save the day. Alternatively, borrowers can choose to build their credit profile slowly using the tips we’ll uncover later in this post.
Getting personal loans with no credit, though difficult, is possible. Before applying for any loan product;
Its recommended that you apply for auto-pay so you don’t miss out on any repayments. The first and most crucial step while trying to rebuild your credit history is by making prompt repayments.
Personal loans with no credit history are meant for borrowers without a credit history – basically a record of how they behave when offered a loan. So, you don’t exactly need a credit history to qualify for these loans.
However, different lenders have different requirements users must meet to be considered for these loans.
The universal requirement is that you must have attained the age of 18 years and above. You also need to be a legal resident of the US. You prove this by showing the lender your national ID, valid driving license, or passport.
Other requirements include your proof of income such as your bank statements, latest payslips or the previous year’s tax returns, or a letter from your employer.
You’ll also need to demonstrate the ability to repay the loan. Here, you could offer a property to act as security for your loan. A close relative or friend with a good credit profile can also act as your co-signor or guarantor.
How much you can borrow varies from one lender to another. Our top lenders above offer between $1,000 to $50,000.
Since you don’t need credit history while applying for these, lenders mostly check the activities of your account to determine your loan limit. While at it, they’ll check your available balance, and the frequency of withdrawals and deposits.
Having a guarantor with an excellent credit profile can also unlock higher limits. Alternatively, you can also use your car, home, or any other valuable assets to get higher loan limits. They only have to be worth higher than the amount you’re looking to borrow.
If you’re finding it hard qualifying for a loan without a credit history, the following tips will come in handy;
Despite qualifying for a loan without a credit history, it’s still crucial to build one. The easiest way to do that would be to apply for as many credits as you can. While at it, ensure you service them on time.
Here are a few tips that could help you build your credit from scratch;
Your credit history gives lenders an idea of your likelihood to make timely repayments on your loans or credit card debts. The absence of such makes it hard for lenders to just take your word for it that you’ll repay your loan on time.
Yes. you can do that by approaching a bank, credit union, or online lender for the same. Alternatively, you can go for co-signed loans with an individual with a good credit profile and a high income-to-debt ratio. Paycheck advances can also serve you just right. Talk to your employer and find out if they can offer you such.
No, these loan products are not a good idea for someone looking to build their credit profile. Instead, ask for loans from family and friends and paycheck advances if your employer offers such. Alternatively, you can also go for loans made specifically for that, like credit-builder loans.
That happens when you haven’t used any credit for the past 2 years. When credit bureaus don’t see any activity on your account, they’ll have nothing to report. You also lack a credit history if you’re a new immigrant to the United States. You’ll have to build your credit profile from scratch. You’ll also have no credit profile if you just turned 18. Similarly, if you’ve never taken a loan before, you won’t have a credit history.
Payday loans and title loans are a no-go zone if you’re looking to build a good credit profile. They carry high interests and could hurt your credit profile further. You should also avoid pawn loans. Instead, go salary advances, soft loans from friends, and secured personal loans.