How to get a personal loan with no credit score |
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How to get a personal loan with no credit score

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You’ll find online options for the “credit invisible.” But you might want to start with building your credit.

It sounds like a Catch-22: To be eligible for most loans in America, you need a history of paying off debt. But what if you’ve never held debt? Around 11% of adults in the US are “credit invisible” — with a history too scant of financial activity to result in a credit score — and another 8.3% have a credit history that credit bureaus can’t score, according to a 2015 Consumer Financial Protection Bureau study.

Without a long, strong credit history, you might not have as many options for borrowing. But that doesn’t mean you aren’t eligible for a loan.

Can I really get a loan without established credit?

Yes, but it could take work to find a lender willing to work with you. You might also need to adjust your expectations if you’re looking for, say, a large bank loan of $100,000.

With so many lending upstarts competing for your business, an online lender might be a good place to start, especially for smaller loans. Many of these lenders use new technologies and alternative sources of data to determine your creditworthiness. They believe a broader look at your income and financial habits can better predict your creditworthiness than merely relying on your credit score.

However, more traditional lenders — like banks and credit unions — are typically not willing to take on the risk of a borrower without a credit history. That’s because your credit report reveals to your lender how you’ve handled debt in the past. With no credit history, you’re considered a wild card. These lenders also consider your income, employment status and debt-to-income ratio when reviewing your application.

Where to get a loan with no credit history

Despite lacking a comprehensive credit history, you’ll find several options for getting your hands on a loan.

Lenders that accept cosigners

If you have a friend or relative with a strong credit history, consider asking if they’d be willing to cosign a personal loan. When you apply with a cosigner, your lender considers that person’s credit history and employment status when determining approval, terms and conditions for a loan. Importantly, your cosigner is also responsible for paying off the loan if you default.

Don’t confuse a cosigner with a coapplicant or joint applicant. With a coapplicant or joint applicant, the lender considers both of your credit histories equally. So even if your coapplicant has excellent credit, you might not see approval or a competitive rate.

Alternative lenders

Don’t have a cosigner? If you’re new to this country or only recently turned 18, check out lenders that consider your education, your career path and other variables outside of your credit score. For example, the San Francisco-based lender Stilt specializes in loans for nonresidents also works with US citizens who don’t have a credit history.

Students might also want to look into lenders that specialize in personal loans for students, like Boro. These lenders consider factors that include your academic performance and earning potential.

Before applying with an alternative lender, make sure you meet its eligibility requirements. For instance, Stilt is available in 11 states only, and others may require a specific GPA or level of education to qualify.

Friends and family

Likely your least expensive option for borrowing money is asking your loved ones for a personal loan. Keep it informal, if you have a close relationship with your relatives.

Or use a service like Loanable to set interest rates and terms that result in a legally binding contract. That way, your relatives earn money on the interest, and you get a more competitive rate than you would with a traditional lender.

Community Development Financial Institutions (CDFIs)

CDFIs are local banks or credit unions that offer financing options to members of the community who have poor or no credit. Their goal is to provide an affordable source for funds in historically underserved communities.

Many offer loans that come in small amounts but at more competitive rates than you’d find with a short-term lender. For example, Spring Bank in New York City offers small-dollar loans to employees of local businesses with a fixed interest rate of 16% for everyone who gets approved.

Credit unions

Credit unions commit to reinvesting earnings to keep savings rates high and loan rates low. And they’re often more likely to offer loan options for credit union members with no credit history.

Members of federal credit unions might have access to affordable small-dollar loans, thanks to the National Credit Union Administration’s Payday Alternative Loans (PALs) program. Many local credit unions offer similar products.

PALs are designed to help you develop healthy financial habits while taking advantage of strong terms and conditions you won’t find with a payday loan:

  • Loan amount — $200 to $1,000
  • Terms — One to six months
  • Fee — Up to $20 and no more than the cost of processing your application
  • Rate — Up to 28%
  • Requirements — credit union member for at least one month

Short-term loans

Payday loans, title loans and other short-term loans should be reserved for financial emergencies only. They often come with APRs in the triple digits, and not all companies offering loans are legit.

Some short-term lenders require at least poor credit to qualify, so carefully read your lender’s eligibility requirements before you apply.

  • Most payday lenders don’t report to credit agencies.

    If you’re looking to take on a loan to build or repair your credit history, a payday loan isn’t the way to go. That’s because payday lenders don’t report on-time payments to the credit bureaus. The only way that a payday loan shows up on your credit history is if you’re unable to pay it back — and that won’t be much help for getting credit in the future. Instead, consider an alternative to get over your financial hump.

Crypto-backed loans

Got bitcoin but no credit score? You might want to look into getting a loan backed by your cryptocurrency assets. These lenders typically don’t rely on the conventional ways of evaluating your creditworthiness, so your lack of credit history might not be a problem. For example, BlockFi doesn’t even run a hard or soft credit check when you apply.

But beware: Since crypto is a highly unstable form of currency, these loans can be risky. If the value of your coin drops enough, you could be forced to repay your loan in full with very little notice.

Compare personal loans that allow cosigners

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Rates last updated November 14th, 2018

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Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
Name Product Product Description Min. Credit Score Max. Loan Amount APR
LendingClub Personal Loan
A peer-to-peer lender offering fair rates based on your credit score.
6.95% to 35.89% (fixed)
FreedomPlus Personal Loans
Consolidate debt and more with these low-interest loans. Cosigners welcome.
4.99%–29.99% (fixed)
OneMain Financial Personal and Auto Loans
An established online and in-store lender with quick turnaround times. Poor credit is OK.
16.05%–35.99%* (fixed)
Laurel Road Personal Loans
Get a personal loan with no application or origination fees and a rate discount for autopay.
5.5%–11.74% (fixed)

Compare up to 4 providers

Looking for a loan doesn’t require a credit check?

When you don’t have a credit score, your borrowing options are slightly different than those for people with bad credit. Lenders that are willing to work with people who have no credit score often run a hard check on your cosigner’s credit.

However, no-credit-check lenders tend to assume that you have bad credit rather than no credit. No-credit-check loans can be more expensive than other options for borrowers with bad credit. Read our comprehensive guide to bad-credit loans to find options that fit your specific financial circumstances.

The dangers of no-credit-check loans

How to build credit to get a loan

You’ll have a leg up for approval on a competitive loan if you have a credit rating. If you don’t need the funds right away, consider positioning yourself for stronger offers by building your credit score first.

  • Get a credit-builder loan. Most credit unions and CDFIs offer credit accounts designed to help you build your credit. Instead of giving you the amount up front, the lender puts the funds into a savings account. You pay off your loan each month, the lender reporting each repayment to the credit bureaus. After you’ve paid off your loan, you get access to your money.
  • Consider a secured credit card. Secured credit cards require a deposit of around $200 to $500 as collateral, which typically determines your credit line. Each time you make a payment, the credit card company reports it to credit bureaus. After you’ve built up sufficient credit, you can upgrade to an unsecured card or apply for a personal loan.
  • Use a lender’s credit-building service. Lenders like Stilt offer credit-building services based on monthly bills, rather than personal debt.
  • Pay off your student loans. If you’re still in school and have student loans, get a head start on building your credit score with interest-only repayments. By the time you’re out of school, you’ll have built up a stronger credit history than if you’d deferred your loan until the end of your grace period.

Bottom line

While not impossible, getting a loan without a credit score can be tricky. If you have the time, consider building your credit score before you apply for a loan. You’ll have more options and might see an easier application process, documentation requirements and stronger terms and conditions.

Learn more in our guide to personal loans, where you can also compare top lenders against your needs.

Frequently asked questions

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Anna Serio

Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.

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US Personal Loans Offers

Important Information*
Credible Personal Loans

Get personalized rates in minutes and then choose a loan offer from several top online lenders.

Monevo Personal Loans

Quickly compare multiple online lenders with competitive rates depending on your credit score.

LendingClub Personal Loan

A peer-to-peer lender offering fair rates based on your credit score.

SoFi Personal Loan Fixed Rate (with Autopay)

No fees. Multiple member perks such as community events and career coaching.

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