How to get a loan with no credit history

It’s easier to qualify for a personal loan with an established credit history. But if you don’t have any credit, a lender may still approve you for a loan. Here’s how to get a personal loan with no credit history, as well as some steps you can take to establish and build your credit.

How to apply for a personal loan with no credit history

If you need a loan but you don’t have a credit history, follow these steps:

1. Shop around and compare options

Do some research and find several lenders who focus on factors such as income and employment history instead of just your credit score. Then, compare their interest rates, repayment terms, fees, and eligibility requirements. Some lenders will let you prequalify and check your loan offers without hurting your credit.

Credible makes it easy to see your prequalified personal loan rates from various lenders all in one place, and it won’t affect your credit score.

2. Choose a lender

Once you have a few prequalification offers, read reviews online to get an idea of each lender’s reputation. Then, pick a lender with the ideal loan for your unique budget and situation.

3. Apply for the loan

Most lenders will let you apply for a loan on their websites, from the comfort of your own home. Be prepared to share basic personal and financial information about yourself. You’ll also need to submit documents, including pay stubs, tax returns, and bank statements.

4. Close on the loan

If the lender approves your application, it’ll send you the final loan documents. Review them carefully and make sure you understand all the terms of the loan before signing on the dotted line. You can expect to receive your loan funds via direct deposit shortly after, sometimes as soon as the same or next business day after approval, though funding times vary depending on the lender.

5. Build your credit

Once you’ve received your funds and started repaying the loan, do your best to make your monthly loan payments on time, every time. Your payment history is the biggest factor that makes up your credit score. Having a history of on-time payments on your credit reports will help you build credit and open the doors to more financing options in the future.

How to establish credit if you have no credit history

If you don’t have a credit history, it’s important to establish one. With a high credit score, you’ll find it easier to buy a house, car, or anything else with the lowest possible interest rates. Having good credit can save you thousands of dollars in interest charges over your lifetime. Here are some ways you can establish a credit history:

  • Become an authorized user. When you become an authorized user on someone else’s credit card account, you can use it to make purchases and pay it off each month like you would with your own card. If you go this route, make sure the primary cardholder, which can be a family member or close friend, doesn’t carry a high balance and always makes on-time payments.
  • Apply for a secured or student credit card. Depending on your situation, you may qualify for a secured or student credit card. With a secured credit card, you put down a refundable deposit and charge purchases on it up to the deposit amount. A student credit card is specifically designed to help students build credit but usually comes with lower credit limits and fewer perks than traditional credit cards.
  • Continue to monitor your score. Even after you’ve built strong credit, it’s a good idea to keep tabs on your score on a regular basis. To do this, request a free credit report through the major credit bureaus or a credit-monitoring service. Credit reports will give you insight on whether your hard work to build credit is paying off and uncover any errors that may be present. Keep in mind that it typically takes about six months for your credit score to be generated.

If you’re ready to apply for a personal loan, Credible makes it easy to compare personal loan rates from various lenders to find one that suits your needs.

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