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

Yes, you can get a personal loan with no credit, though options are limited, it will cost more and you may need to get a co-signer or offer collateral. If you have no credit history, you may also qualify for loans that use alternative approval methods, such as income verification, collateral or a co-signer instead of a traditional credit check.

No credit is different from bad credit.

• No credit means you don't have a record of borrowing history.

• Bad credit indicates negative history in how you manage your bills.

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These loans skip the credit pull entirely, which makes them easier to qualify for but often far more expensive.

Key Takeaways

• Yes, you can qualify for a personal loan with no credit history, but expect higher rates and tighter requirements. Lenders will likely review your income, employment, bank cash flow and rent or utility payment history.

• Your best options include credit-builder loans, secured loans backed by collateral and co-signed loans. Typical APRs range from 7% to 36%, and funding usually takes one to three business days.

• Before you apply, prequalify with multiple lenders to compare rates, gather pay stubs and bank statements, and confirm the lender reports to all three credit bureaus so the loan helps build your credit.

Summary generated by AI, verified by MoneyLion editors

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No Credit Check vs. Soft Check vs. Hard Check

Not every lender reviews your credit the same way. Understanding the difference between a no-credit-check loan, a soft credit check and a hard credit inquiry can help you choose the right borrowing option.

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.

What Lenders Look for If You Have No Credit

You can get a loan if you have no credit. But in order to do so, you may have to pay higher rates, need a co-signer or offer collateral. The lender needs these assurances since they will have a hard time assessing whether it's risky to lend you money.

The lender will look at your employment history, income and how much cash flow is in your bank account to assess your loan limit and APR.

• Income and employment history: A lender wants to see you're not out of work or prone to it, so this can go a long way toward approval.

• 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. Banks may look at the payment history of your utilities, rent, etc.

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

Typical Loan APR and Funding Speed

• APR: Can range from 7% to 36%. For riskier loans, the percentage can be much higher.

• Funding: Same day or a few business days.

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's the quickest way to establish credit when you don’t have a profile.

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've got a friend or family member with good credit who trusts you wholeheartedly, you can ask them 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, you could take their 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 will benefit if timely payments are reported to the credit bureau.

How To Get a Loan With No Credit

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

1. List your expenses to find out what you can pay every month for a new loan.

2. You can compare lenders to find the best rate by prequalifying. This will result in a soft pull on your credit.

3. Review the information about loan types and costs.

4. Have your documents ready, such as your ID, pay stubs and bank statements.

5. Determine if getting a co-signer will help you secure the loan.

6. Ask the lender if payment information is reported to all the bureaus.

7. Check the APR, fees and repayment terms.

8. Apply for the loan and find out when it will be funded.

Documents To Gather Before You Apply

• 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 signing up for a loan is tempting once you're approved, 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 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.

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.

FAQs

No credit vs. bad credit — what's the difference?

No credit means that you don't have a record of borrowing history, while bad credit means there's a credit history with negative flags on your credit — missed or late payments, bankruptcy filings, collections.

Is prequalification a soft pull?

Yes, generally prequalifying will cause a soft pull on your credit.

How fast can I get funds?

This depends on the lender. You can typically get funds within one to three business days.

Do all lenders report to all three credit bureaus?

No, not all lenders report to all three credit bureaus.

Can a no-credit loan help build credit?

Yes, having no credit essentially means you're a blank slate, so it can help you build a credit profile.

Can you get a loan without a credit check?

Yes, but your options are limited. Payday loans, auto title loans and some installment lenders don't perform traditional credit checks, though they often charge higher interest rates and fees than personal loans that require a soft or hard credit inquiry.

What personal loan options don't require a hard credit check?

Many online lenders let you prequalify using a soft credit check, allowing you to compare rates without affecting your credit score.

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