Here’s How to Get a Loan With No Credit History

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

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Being “credit invisible” — a term that describes borrowers who don’t enough financial history to produce a credit score — is a problem that affects 11% of American adults, or 26 million people, according to the Consumer Financial Protection Bureau.

Your credit score measures how likely you are to pay back debt, so getting a loan with no credit history can be difficult. Those who are credit invisible might have to work harder to secure a loan, but there are options. Here’s how to get a loan with no credit history.

1. Use a credit builder loan

There are several tools that can help you build your credit, but a particularly useful strategy for those with no credit is the use of a credit builder loan.

It works like this: The lender will let you borrow a small amount, but you won’t receive the money upfront. It will be deposited in a savings account, instead. You make on-time payments every month toward the loan, which has an impact on your credit score. The lender then reports your timely payments to credit bureaus, helping you build a positive credit history. When you’ve paid off the loan, you get access to the funds.

You can apply for a credit builder loan online through companies such as Self Lender, which offers loans with monthly payments that can be as low as $25.

2. Look for a credit union

Credit unions often are more willing to take on a risk by lending a small amount of money to people with no credit. In 2010, the National Credit Union Administration created the Payday Alternative Loan program, which is offered by federal credit unions. You can borrow between $200 and $1,000 for a term of one to six months.

Some private or state credit unions also have similar products. Search online to find a credit union near you.

However, you should know a few things about payday alternative loans.

First, a federal credit union often is able to give you the best terms on your loan. That’s because the Payday Alternative Loan program is regulated. Sign-up costs can go up to $20, and the federal credit union can charge you a maximum APR of 28% only.

Other credit unions can charge a maximum interest rate of 18% only, but their application fees might be higher, which could make the transaction financially impractical if you need to borrow a small amount.

Lastly, some credit unions might not report your successful loan payments to all three credit reporting agencies. Even if you pay back the loan on time, it might not help build your credit. This might not matter if you just want to know how to get a loan with no credit. But if you’re interested in building your credit history, too, ask your credit union if it reports your payments to all three credit bureaus.

3. Payday loans can be costly

If you need money now — say, to pay your rent or cover an essential or emergency expense — you might consider a payday loan. But approach those lenders with extreme caution.

You likely will get approved for a payday loan immediately, but this kind of borrowing can ignite a bad debt cycle. Since you’re considered a risky borrower due to your lack of credit history, payday lenders will charge a high interest rate to offset their risk.

Payday and pawn loan amounts typically are under $500, so it might not seem like a lot of money initially. But it all adds up: The fees can total to an equivalent of about 400% APR in many cases, making such loans one of the most expensive ways to borrow money. In addition, repaying the loan can be challenging, if not impossible.

Many payday lenders also don’t report your payments to the credit bureaus. So even if you pay back your loan on time, it won’t help build your credit, which would leave you right where you started.

Consider all other options before going to payday lenders, even if that means turning to friends or family for a small loan. Creating guidelines around the terms of your loan and repayment is a proactive tactic to use while borrowing money from people you know. Such a loan won’t help you build credit, but it could keep you from paying high interest rates and outrageous fees.

4. Build your credit first

Learning how to get a loan with no credit isn’t always simple. The smartest move, if you have the time? Build up your credit before you apply for a loan.

It’s not a quick fix, but if you build your credit before applying for a loan, you could find lower interest rates later.

You don’t have to take out a loan or open a credit card to build your credit, although the options are feasible. An alternative solution is to use a service to report your rent payments to a credit bureau.

With Rental Kharma, for instance, you can have your last two years of timely rent payments reported to TransUnion and have it count toward your credit score. It costs $25 to sign up and $6.95 per month for the service. According to the company, some of its clients report an average credit score increase of 30 to 50 points in two weeks.

How to get a loan with no credit

Unless you need emergency funds, it’s usually best to build your credit first before applying for personal loans. This could mean putting off your dreams for a few months, but it doesn’t mean you have to give up.

Building credit history is a process, and starting off on the right foot will make a big difference throughout the rest of your financial journey.

Interested in a personal loan?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  • Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  1. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  2. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.73% – 29.99%$1,000 - $50,000
Check rate nowon SLH's secure site
6.28% – 14.87%1$5,000 - $100,000
Check rate nowon SLH's secure site
6.87% – 35.97%*$1,000 - $50,000Visit Upgrade
8.00% – 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
4.99% – 29.99%$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
5.99% – 35.89%$1,000 - $40,000Visit LendingClub
5.49% – 18.24%$5,000 - $75,000Visit Earnest
9.95% – 35.99%$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.