How To Get a Loan With No Credit: Options That Work

You can get a loan with no credit history. There are a few ways to do so: apply for a traditional personal loan, get a credit builder loan, add a co-signer or put up collateral. A traditional personal loan may come with higher rates or fees, while a creditworthy co-signer or collateral may help you qualify for better rates and repayment terms.

Applying for a loan is easy and funding can take a few days or up to a week. The exact timeline depends on the lender and how quickly your application can be verified.

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Learn more about how to get a loan with no credit and compare your options in this guide.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms and fees from different lenders and choose the best offer for you.

Key Takeaways

• You may qualify for a personal loan with no credit history, but expect higher rates and stricter requirements. Lenders may review your income, employment, bank activity and rent or utility payment history.

• Your main options include credit builder loans, secured loans and co-signed loans. Credit builder loans can help establish a credit history but usually hold the funds until you finish repaying, while secured and co-signed loans may improve your approval odds or terms.

• Compare loan offers carefully before applying. Prequalify when available, gather documents, review annual percentage rates (APRs) and fees, and confirm that the lender reports payments to the credit bureaus if building credit is your goal.

Summary generated by AI, verified by MoneyLion editors

No Credit vs. Bad Credit: Why the Difference Matters

Having no credit isn't the same as having bad credit, and lenders may view the two differently.

How Different Loan Options Check Your Credit

Some loan types may not require a traditional credit pull, while others let you prequalify with a soft credit pull that doesn't impact your score.

What Lenders Look for If You Have No Credit

If you're seeking a loan with no credit, lenders will typically look at your employment history, income and your bank account activity to assess your loan limit and APR. A steady income and consistent bank activity can help show lenders you have the ability to repay the loan.

Here are other factors they may consider:

• Payment history: Paying your credit card bill every month isn't the only way a lender can get an idea of what type of customer you'll be. They may also look at the payment history of your utilities, rent, etc.  

• Collateral: If the bank is hesitant to lend you money, it may ask for some sort of guarantee. This may be a refundable security deposit, an asset that you're willing to pledge or a co-signer who has good credit. 

Best Types of Loans for No Credit

These loans are designed for people building credit from scratch. Most still run a credit check, but they're structured to help you qualify — and to build your credit as you repay, when the lender reports to the bureaus. 

Credit Builder Loans

Some financial institutions allow you to open an installment loan without giving you the money upfront. Instead, as you pay off the loan, you'll receive access to your money. Credit builder loans are great for building credit, but not for borrowing money. You'll also pay monthly interest, which is less than ideal.

How they work: Your loan amount is placed in a savings account. These funds are locked by the lender until you pay off your loan.

• Who it's best for: People who are just beginning to establish their credit profile.

• One key risk: If you miss a payment, it can be reported as delinquent.

• How it builds credit: It can help establish credit history when the lender reports payment activity to the credit bureaus.

Secured Loans

You can open some installment loans and credit cards by using collateral, such as your car or a security deposit. This gives the bank more confidence to give you a chance, because if you default on your loans, the bank can use your collateral to pay your debt.

Secured vs. unsecured loans: The difference between secured and unsecured loans is collateral. Secured loans require some type of collateral — car, home or savings — while unsecured loans don't require collateral. Secured loans tend to have lower interest rates than unsecured loans.

• Who it's best for: People with some savings and at least one asset, like a car, that's completely paid off.

• One key risk: You run the risk of losing your collateral.

• How it builds credit: You build credit as long as the lender reports it to the three credit bureaus.

Co-Signed Loans

If you're young and don't have credit and lack strong employment history, you could ask a friend or family member to co-sign the loan with you. But again, they're ultimately the one responsible if your bill isn't paid. If you're irresponsible with your credit, your actions could impact their credit score as well as your own.

Co-signer liability: The co-signer is just as responsible for the debt as you are. If you make a late payment, it will also be reported on the co-signer’s credit report.

• Who it's best for: If you need a large amount of cash but don’t have the credit to borrow that amount.

• One key risk: If you default, you run the risk of straining your relationship.

• How it builds credit: Both parties can benefit if timely payments are reported to the credit bureau.

Peer-to-Peer Loans 

A P2P loan connects borrowers with investors through an online lending marketplace rather than a traditional bank. The platform handles the applications and determines the rate and eligibility by evaluating your credit and financial profile.

• Who it's best for: Anyone who wants to compare a marketplace option outside traditional banks.

• One key risk: Rates, fees and funding vary by platform and your financial profile.

• How it builds credit: Credit reporting varies by platform.

Loan Types to Avoid

Some loans may be easier to access with little or no credit history, but the high costs and short repayment periods can outweigh the convenience.

• Payday loans: These are short-term loans with high APRs and an automatic repayment date. If you fail to repay in two weeks — on your next payday — you may be able to roll the balance over or take out another loan. This creates an unending debt cycle.

• Title loans: With title loans, you hand over your car title as collateral. These loans usually come with high APRs and a repayment date of 30 days. If you fail to repay, your vehicle could be repossessed.

More Loan Options Beyond the Basics

Other borrowing options may be available depending on your financial situation and the assets you have access to.

401(k) Loans

With a 401(k) loan, you borrow from your retirement savings. You may be able to borrow up to 50% of your vested balance or up to $50,000. There is no credit check and the loan is typically repaid through paycheck deductions.

If you leave your job, the plan may require repayment. If you’re unable to repay the amount, it may be treated as a taxable distribution. You may also owe a 10% additional tax if you’re younger than 59½, unless an exception applies.

• Who it's best for: Workers with a 401(k) plan that allows loans

• One key risk: Reduced retirement savings and potential tax consequences

• How it builds credit: No credit-building benefit

Home Equity Loans and HELOCs

A home equity loan works like a second mortgage on your home. You borrow a lump sum and repay it through fixed payments.

A home equity line of credit (HELOC) gives you a revolving line of credit based on your home equity. You can borrow as needed during the draw period and repay what you borrow according to the lender's terms.

Here are the key differences:

• Interest rate: Home equity loans generally have fixed rates, while HELOCs have variable rates.

• Access to funds: Home equity loans are paid as a lump sum, while HELOCs let you draw funds as needed.

• Monthly payments: Home equity loans offer more predictable fixed payments, while HELOC payments can change over time.

Both options may involve closing costs, including appraisal, origination and title fees.

• Who it's best for: Homeowners with sufficient equity

• One key risk: Loss of home if you default

• How it builds credit: Potential positive payment history with on-time payments

Pawn Shop Loans

A pawn shop is a loan in which you offer collateral like jewelry, electronics or other physical items in exchange for cash. The shop will appraise it and you’ll generally receive 25% to 60% of the collateral’s value.

Loan terms are short, typically around 30 days and if you’re unable to pay, you’re risking high fees and may lose your collateral.

• Who it's best for: Borrowers with poor credit who need cash fast

• One key risk: Loss of collateral

• How it builds credit: No credit-building benefit

Friend and Family Loans 

A friend and family loan has the advantage of no credit checks, flexible repayment terms and the possibility of no or low interest. However, nonpayment could result in a fracture in the relationship.

If you decide to borrow from a family member, make sure you have a written agreement noting the amount, the rate and the repayment terms.

• Who it's best for: Borrowers seeking flexible, low-cost terms from someone they know

• One key risk: Damage to the relationship if you don't repay

• How it builds credit: No credit-building benefit

How To Get a Loan With No Credit

Here's a guide to get a personal loan with no credit:

1. Determine your overall budget and if you can afford to take on a new loan.  

2. Figure out what loan amount you need.

3. Compare some of the best banks and lenders by looking at APR, fees and repayment terms.

4. Prequalify with lenders to find the best rate. This will result in a soft pull on your credit.

5. Gather your documents, such as your ID, pay stubs and bank statements.

6. Apply for the loan online or in person and find out when it will be funded.

7. Review the loan terms and accept.

Documents To Gather Before You Apply

Before you apply, review the personal loan requirements so you know which documents to gather. You'll typically need:

• Income: Provide proof of income in the form of a W-2 or recent pay stub.

• Employment: Provide an offer letter or other verification of employment.

• Bank activity: Provide a bank statement.

• Rent or utility history: Provide payment records regarding rent and utilities.

• Debt-to-income ratio: Provide a list of all your outstanding debts.

• Collateral: Provide proof of ownership.

• Co-signer: Provide support that a co-signer is willing to sign and has a good credit score.

What To Watch Out For When Applying for a Loan

Although you can get a loan without a credit check, there are some red flags to watch out for:

• Is the APR high? If the APR is above 36%, understand how much this interest will cost you in the long run.

• Thinking about a payday or title loan? These loans can have APRs of 300% to 400%.

• Is the lender asking for upfront fees? This may be a scam. Check the Nationwide Multistate Licensing System (NMLS) website to verify if the lender is licensed.

• No credit reporting? This loan won't help your credit.

• Penalty for paying the loan off early? This will hamper your flexibility in paying off the loan early.

• Request for bank logins or password? This is a red flag.

• Can't find the lender's physical address? This is likely a lender who isn't licensed, and you may be the victim of a scam.

Pro Tip

Before borrowing, look for warning signs that a lender may not be reputable or the loan could be predatory:

• High APR 

• Upfront fees 

• No credit reporting  

• Early payment penalty 

• Request for bank logins 

• No NMLS listing 

• No physical address 

How Much a Loan Can Cost

A loan's APR can impact how much you end up paying. Here’s a table to show the difference. Imagine you take a $2,000 loan over 24 months at 28% and at 18%. Here’s how the payments look:

*Calculations use standard loan amortization.

Choosing the loan with the lower APR will save you $238.25 over the course of the loan. 

Monitor Your Credit While You Build It

As you build your credit, it's important to track your progress along the way. Here are three ways to do so:   

1. Pull your credit reports: You can see your credit reports every week free of charge from AnnualCreditReport.com. You can spot inaccuracies more quickly if you pull your credit report more frequently.  

2. Do a monthly credit score check: Many banks and apps let you view your credit score for free. Checking your own score this way typically doesn’t affect your credit.

3. Actively monitor for fraud: Set up fraud alerts so you can catch activities on your account in real time. This may prevent future fraud.      

Timeline for Monitoring

• One to three months: Check your credit score, but don’t expect any improvements.  

• Three to six months: You may begin to see some changes in your credit score.  

• Every 3 months: Pull a credit report from at least one bureau to check for inaccuracies.  

• Always: Never lose sight of checking for fraud.  

FAQs

Can you get a personal loan with absolutely no credit check?

Yes, it’s possible to get a personal loan without a credit check. However, these loans come with risks. They typically have higher APRs and shorter repayment terms that may lock you in a continuous debt cycle.

How much more will I pay compared to someone with a 750 credit score?

A borrower with a 750 credit score may qualify for a lower APR because the lender has an established credit history to evaluate. If you have no credit history, you may receive a higher APR or less favorable terms, even if your income is stable.

What's the difference between a soft credit pull and a hard credit pull?

A soft credit pull will not impact your credit score. When you apply for a loan, the lender will typically conduct a hard credit pull and that will cause your credit score to dip.

How long does it take to build credit once you start making loan payments? 

It takes about three to six months for timely payments to impact your overall credit score. For a strong score, the wait is typically one year if you make on-time payments. 

Should you use a co-signer or offer collateral if you have no credit?

Having a co-signer or collateral can boost your chances of getting a favorable loan. However, if you miss payments and there is a co-signer on the loan, they’re on the hook for payments. With collateral, if you default, the lender can repossess your collateral.

What's the realistic timeline from application to receiving your money?

It depends on the lender. For most lenders, a fair timeline is a few days to a week. 

Key Terms

• No credit: No credit means you don't have a borrowing history on file with the major credit bureaus, so lenders have less information to review.

• APR: APR is the yearly cost of a loan, including interest and certain lender fees, shown as a percent.

• Credit-builder loan: A credit-builder loan helps you build credit by making payments first. You usually get the money after the loan is paid off.

• Secured loan: A secured loan requires collateral, like cash or a car. If you don’t repay the loan, the lender can take that asset.

• Co-signer: A co-signer is someone who agrees to repay the loan if you don’t. The loan can affect both credit profiles.

Summary generated by AI, verified by MoneyLion editors

Sources

• Consumer Financial Protection Bureau. 2024. "What is the difference between a loan interest rate and the APR?"

• Consumer Financial Protection Bureau. "Targeting credit builder loans."

• Consumer Financial Protection Bureau. "Differentiating between secured and unsecured loans."

• Consumer Financial Protection Bureau. 2024. "What is a co-signer for a student loan?"

Sarah Hostetler contributed to the reporting for this article.

Photo Credit: Pekic / Getty Images/iStockphoto