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

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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.

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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.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

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.

RATES (APR)loan amount
7.73% – 29.99% $1,000 to $50,000
6.54% – 16.24%1 $5,000 to $100,000
7.99% – 35.89%* $1,000 to $50,000
56.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
4.99% – 29.99%4 $10,000 to $35,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 6.79% APR to 16.24% APR (with AutoPay). Variable rates from 6.54% APR to 14.95% APR (with AutoPay). SoFi rate ranges are current as of January 18, 2019 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 6.54% APR assumes current 1-month LIBOR rate of 2.51% plus 4.28% 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.

    To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  2. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  3. SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.
  4. 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 Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states:

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. This information is current as of October 10, 2017 and is subject to change. Opportunity Financial, LLC lends or arranges loans in the following states: Alabama, California, Delaware, Florida, Idaho, Illinois, Kansas, Maryland, Missouri, Nevada, New Mexico, Ohio, South Carolina, Tennessee, Texas, Utah, Virginia, and Wisconsin. We do not lend or arrange loans in all states. Opportunity Financial offers line of credit products in: Kansas, Tennessee and Virginia. Please note: This is an expensive form of credit. This service is not intended to provide a solution for longer-term credit or other financial needs. Loans made or arranged by Opportunity Financial are designed to help you meet your short-term borrowing needs. Loan amounts may vary and are dependent upon qualification criteria and state law. Refer to Loan Cost & Terms at www.opploans.com for additional details. Complete disclosures of APR, fees and payment terms are provided within the transaction documents, such as the Loan Agreement. First-time Opportunity Financial customers typically qualify for an installment loan of $1,000 to $5,000 with an APR from 59% to 199%. For example, a $1,000 loan made or arranged by Opportunity Financial with 12 bi-weekly payments of $130 has a 199% APR. After the 12th successful payment, the loan would be paid in full.
  3. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day. In some cases, we may not be able to verify your application information and may ask you to provide certain documents. Some customers applying for a loan may be required to submit additional documentation due to state law and qualification criteria.
  4. Lower APRs and longer terms when compared to a typical payday lending product. According to the Consumer Federation of America, a non-profit consumer advocacy group, payday loans range in size from $100 to $1,000, depending on state legal maximums and carry an average APR of 400% and an average loan term of two weeks. The maximum APR for a loan offered by OppLoans is 199% and loan sizes range from $1,000-$5,000 with a typical term of six months dependent on the state law.
  5. As of October 17, 2017. Ratings on third-party websites may periodically change; please check the third-party websites for up-to-date reviews and ratings. Google+ Rating: 4.8 out of 5 based on 1,824 reviews. Facebook Rating: 4.7 out of 5 based on 270 reviews.
3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 4.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 4.99% APR loan, a borrower will need excellent credit on a loan of $15,000 with a term of 24 months, and qualify for at least two of the following discounts: (1) add a co-borrower who has sufficient income; (2) use at least fifty percent of the loan proceeds to directly pay off existing debt; or (3) show proof of having at least forty-thousand dollars in retirement savings – contact FreedomPlus for further details.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.