Yes, it's possible to obtain a loan without a credit history, either on your own or with a co-signer. Your options to get a loan with no credit and no co-signer include credit-builder loans, secured personal loans and home equity loans. But you won't be able to qualify for regular personal loans without collateral because they usually require a 600+ credit score and a few years of credit history. That's where a co-signer comes in handy. By getting someone with established credit history to co-sign for you, you can use their credit rather than yours during the approval process.
If all else fails, you could always try to get a loan from a family member or friend, since they won't necessarily base their decision on your credit history. Lastly, if you want a small loan of $300 - $500 that's available whenever you need it, you can look into credit cards.
How to get a loan with no credit in 2024
- Consider credit-builder loans
- Put up collateral for a secured personal loan
- Take advantage of home equity
- Get a co-signer
- Borrow from family/friends
- Get a credit card for no credit
Credit-Builder Loans
Credit-builder loans are the first avenue to pursue if you don't need cash immediately and are just looking to establish credit history. They're fairly simple. The lender puts a sum of money into a savings account for you, and you repay that sum over time. The lender then reports those payments to the credit bureaus. And at the end, you receive access to the account, so you get the money.
The best places to look for credit-builder loans are your local credit unions and banks. If you need cash right away, you'll have to try another option.
Secured Personal Loans
A secured personal loan requires you to put up something you own as collateral to take out the loan. Some possible things you could use as collateral include your car, property, stocks, or even valuable possessions like art. If you default on the loan, the lender can take your collateral as repayment so they don't lose money.
People with no credit shouldn't have trouble getting approved for a secured personal loan, as they're generally targeted toward people who have bad credit. No credit history is more positive than a history of irresponsibility. And since there's little risk to the lender, approval rates are high. Before going into a secured personal loan, be sure that you're confident you can make your payments. You don't want to risk losing your collateral.
Other “no credit/bad credit” lenders exist. But most of the time, if they're not secured loans they're payday lenders. A payday lender gives you a loan (plus a huge fee) that you will pay back with your next paycheck. Avoid these loans at all costs – they are predatory and charge gigantic fees just to leave you still in a difficult position after you get your paycheck.
Home Equity Loans
Another way to obtain a loan with no credit is to get a home equity loan. A home equity loan is a secured loan that lets you borrow based on the market value of your house minus the amount you have left to pay on the mortgage. That could potentially give you access to a lot of money. However, the danger is that if you default, you could lose your house.
The other catch is that if you have no credit, you probably don't have a mortgage, considering credit scores and reports are a big part of the mortgage decision-making process.
Co-signing
Even if you have no credit, it's possible to get a regular unsecured personal loan if you have a co-signer with established credit history. When you apply, the lender will not base their decision on your credit, but rather on the credit of the co-signer. So if you can find a co-signer with good or excellent credit history, your chances of qualifying for a loan are high.
But it's important to know that the co-signer provides a guarantee of repayment. If you're unable to pay the loan back, the co-signer is held responsible. Make sure you are confident in your repayment abilities so you don't create a bad situation for your co-signer.
Loans From Family/Friends
One simple way to get a loan with no credit is to borrow from a family member or friend. Unlike with a bank, credit union or online lender, you can make a personal appeal. And depending on the person, you may get lenient terms for repayment and low interest.
But if you pursue this option, be sure to make a contract in writing with explicit terms. It's important for the other person to be able to hold you accountable. The biggest danger with this type of loan is that if you default, your relationship with the other person may be ruined. So you must decide if that's a risk you want to take, versus the risk of collateral from another type of lender.
Credit Cards
If you need to borrow $300 or less, you might want to apply for a credit card for no credit instead. There are several credit cards available where you don't need any credit history to get approved, so long as you have some form of income. You probably won't get a big credit line to start (usually around $300), but you can tap in to it any time you need.
