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NY Post
New York Post
4 May 2023


NextImg:No credit history loans: what you need to know

When you have no credit history, it can be tough to find a personal loan. Perhaps you’ve never borrowed money before or your credit history isn’t in the U.S.

Thankfully, “no credit history loans” are one solution. 

Lenders prefer to make loans they consider “safe bets,” so they want to see proof you’ve got experience paying back what you’ve borrowed. Although many lenders won’t lend to people with no credit, some will be willing to work with you. 

Learn what you need to know about getting approved for a loan without a credit history.

No credit check loans are a way to borrow money when you don’t have credit. They’re a type of personal loan that doesn’t require a hard credit check.

When a lender offers a no credit history loan, they use other ways to evaluate your creditworthiness instead. They usually charge high interest rates and fees to cover their risk in lending to an unproven borrower. 

Over time, how well you handle credit forms the basis for your credit score. Other lenders refer to your score to evaluate your creditworthiness.

It’s still possible to get a loan without a credit history, so don’t let that discourage you.

Some lenders are willing to find other ways to evaluate your loan application and lend you the money you need. They might look at your education background, your job, and your income to determine your likelihood of repayment. 

Others might ask you to put down collateral, such as your car or your savings, that they can claim if you fail to pay. These are secured loans.

You’ll usually need to have the following three kinds of documents on hand when you apply for a no credit history loan or bad credit loan:

The lender you choose will specify which documents are acceptable and how many you’ll need. For example, some lenders require two forms of ID along with your completed loan application. 

Before taking out a no credit history loan, it’s important to consider the advantages and drawbacks.

To qualify for a personal loan when you have no credit history, you’ll need to show the lender, bank, or credit union you’re trustworthy in other ways. If you have a proven work history and low debt compared to your income, you’re on the right track.

Often, lenders require you to be at least 18 years old, with a steady income (whether from a job or government benefits). You’ll most likely need a bank account, a Social Security number, and a U.S. street address, too.

But know that lenders’ unique eligibility requirements could affect you in certain cases. Some lenders might not approve you if you’re undocumented. Look into finding a lender who services personal loans for immigrants. Also, there are lenders out there that only operate in certain states. It’s best to check with the lender directly to see if you’ll be eligible.

Follow these steps when applying for a personal loan:

  1. Check your credit report. You can get a free credit report at AnnualCreditReport.com to check what information lenders see about you. If there are any errors you spot in your report, be sure to correct them.
  2. Compare lenders. Every lender has different terms, conditions, rates, and fees.
  3. Choose the right terms; choose the right lender for you. Look for a lender who offers lower interest rates and low or no fees. 
  4. Fill out your application. Make sure you include all required documents. You might need to upload copies or send them through the mail.
  5. Complete the paperwork. Sign your loan documents and arrange to receive the funds.
  6. Make your payments. Timely payments are a part of building a better credit score. 

Related: Learn more about getting a personal loan on Credible.com

Before you sign up for a no credit history loan, learn about your options.

You’ll probably save money if you can put off your personal loan until you’ve built up your credit. Lenders often reserve the best rates for the best credit scores. Working on building a credit history will give you a credit score, which lenders can use (along with other factors) to approve you for a loan. You’ll be able to try for better interest rates once you’ve built up to a good credit score.

The best way to build credit is to borrow money then make your monthly payments on those funds on time. Don’t borrow more than you need, don’t borrow up to your limit, and don’t apply for too much, too fast. Student loan debt, credit builder loans, and secured credit cards are some ways you can get started. 

Over time, careful management of your credit will show lenders that you are responsible with borrowed money.

You have options, but some are better than others. Borrowing with a cosigner is one alternative. Another option is asking a friend or family member for a short-term loan to tide you over. 

Payday loans and paycheck loans promise fast, easy money, but you could pay an annual percentage rate (APR) of more than 400%. Car title loans and pawnshop loans take your valuables as collateral, but if you can’t pay on time, you lose them forever. 

When you need funds fast, take time to find the best solution for you. 

Related: Learn more about getting a personal loan on Credible.com