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Fact Checked
Nathan Alderman
There may be times in your life when you need a personal loan. But if you're just starting out, it can be difficult to get a loan with no credit. To help you navigate that hazy period when your credit file is thin, we'll discuss the best ways on how to get a personal loan with no credit, what options you have, whether a "no-credit-check" loan is a good idea, and alternatives worth considering.
Can I get a loan with no credit?
Yes, it is possible to get a loan with no credit score. But you're likely to be hit with a high interest rate and less-than-favorable terms. Your lack of credit scares lenders. The tool they would normally use to judge whether or not you're likely to pay back the loan (your credit score) is either nonexistent or too thin to tell them what they need to know.
Here are a few reasons you may not have a credit score:
- You're just moving into adulthood and haven't had the time or opportunity to build a credit score.
- You haven't used credit in the past two years. Lack of activity puts a stop to the information needed to generate an accurate score.
- You're a recent immigrant, just starting out in the U.S., and must build a credit score from scratch.
TIP
Having no credit score is not the same thing as having a bad credit score
When someone tells you that you have no credit score, it simply means that there is no clear record of how you behave as a borrower. Personal loans for those with no credit are great borrowing options specifically designed for borrowers who don't have a lengthy credit history.
It can be tough to get a loan with no credit, and if you're in this position, you're not alone. Around 28 million people are credit invisible, meaning they have no credit history, according to Experian and Oliver Wyman. Another 21 million are unscoreable, meaning they have some information on their credit history, but not enough to generate a credit score.
If you have credit, the credit score needed for personal loans can get a little confusing. Whether you want an auto loan, a loan to finance a new pool, or a personal loan to help cover an emergency situation, a strong credit score is key to opening the credit door.
What loan options are available if I have no credit?
Let's say you find yourself in a pinch and need to get a personal loan with no credit. Qualifying for emergency loans without a credit score is not easy, but it is possible. To get a loan with no credit, it pays to know your options.
Below, we'll talk about how these options can help you get a loan with no credit:
- Online lenders
- Banks and credit unions
- Cosigner
- Collateral (secured loans)
- Paycheck advances
- Personal loans for bad credit
- Credit-builder loans
- Family and friends
Online lenders
Some online lenders cater to borrowers looking to get a loan with no credit by weighing other things. They might look at where you attended college, your major, and grade point average.
Banks and credit unions
If your credit history is practically nonexistent, you may be surprised by your ability to get a bank loan with no credit through your home bank or credit union. As long as you have an established relationship, a bank or credit union can easily pull up your account to check things like how regularly you make deposits, if you spend more than you bring in, and generally, how responsibly you handle your account.
Cosigner
A cosigner with a strong credit score improves your odds of being approved for a loan but it's not guaranteed. It also increases the likelihood you'll score a low interest rate and attractive repayment terms. Plus, each on-time monthly payment helps you build a positive credit history. Only get a loan with a cosigner if you're sure you can pay it back: if you miss a monthly payment, your cosigner's credit will suffer.
Collateral (secured loans)
There are two types of personal loans: secured and unsecured. A secured loan means that you promise to give the lender something you own (an asset) if you can't pay the loan. This is known as "pledging collateral."
It's usually easier to qualify for personal loans without credit if you can offer collateral.
Collateral may be anything of value, for example: a retirement account, a car, a savings account, or jewelry.
Paycheck advances
Some employers offer paycheck advances. These are loans repaid through deductions from future paychecks. Often, these programs are run through third-party lending companies and offer all employees the same interest rates and terms -- regardless of their credit scores.
If you need to get a loan with no credit and your employer offers a paycheck advance, it can benefit you in two ways:
- You'll get the loan you need when you need it.
- It can help build your credit score.
Before you take out a loan, make sure you understand how much it's going to cost you in interest and fees. Also find out about repayment terms and make sure you can afford the monthly deduction from your paycheck.
Personal loans for bad credit
As we mentioned, having a thin or nonexistent credit score is not the same as having a bad credit score. Still, lenders willing to take a risk on borrowers who need to get a loan with no credit are often the same lenders who take a risk on borrowers with poor credit.
Personal loans for bad credit give you the opportunity to make full, on-time payments that will raise your score. Just watch out for interest rates -- rates on these loans can be on the high end.
Credit-builder loans
To get a loan with no credit you may want to look into a credit-builder loan. With a credit-builder loan, you apply and are approved for a small loan. You make payments on the loan, including interest, and those payments are reported to the credit bureaus. It's only after all payments are made that you have access to the money you borrowed.
A credit-builder loan is a good option if you're trying to build credit. It's not a good option if you need money right away.
Family and friends
It will come as no secret to your family and friends that you'll need help to get a loan if you have no credit. They'll understand if you haven't had time to build a credit history. If you find yourself in an emergency situation, ask for help from those who care about you.
If they agree to lend you money, treat it as you would any loan. Write up an agreement outlining:
- How much you're borrowing
- How often you will make a payment
- How much the payment will be
- When the loan will be paid in full
Social assistance
If you're struggling to pay the bills, look into available social assistance. You might be surprised at what you qualify for. Some places to start:
- SNAP benefits
- Housing assistance
- State welfare
- Local food banks (some don't have income requirements)
- The Children's Health Insurance Program
If you're renting, ask your landlord about rent relief. Some landlords are willing to move the date rent is due, delay this month's rent to next month, or offer rent relief in exchange for help around the property (like landscaping, office work, or cleaning).
And if you own your home, ask your mortgage lender about forbearance. If you're facing financial hardship, you may qualify for mortgage forbearance, which means you won't need to make mortgage payments in the short term. Long-term impacts of this decision vary by lender, so make sure you understand the details of what you're agreeing to.
Is a no-credit-check loan a good idea?
Payday loans and title loans are types of no-credit-check loans. It's usually best to avoid these loans, but if you're out of financial options, a no-credit-check loan could help you make ends meet.
The best way to approach a no-credit-check loan is to make paying it off your first priority -- even before paying off credit card debt. No-credit-check loans often charge 400% or more in interest. They're extremely expensive compared to credit cards and other alternatives.
Let's say you need to fill a prescription, but payday is still a few days away. Going without a prescription can be dangerous, so you take out a payday loan to fill the prescription. Then, you pay it back when your paycheck is deposited.
Be careful: No-credit-check loans trap some people in a cycle of borrowing. In this situation, the borrower can't afford to pay off their payday loan, so they take out another payday loan to pay off the first one. If you can't pay off your payday loan in cash, look into other ways to pay it off, like:
- A balance transfer credit card
- Credit card payment (if the lender accepts it)
- Paycheck advance
- Any of the other above alternatives
This can help you avoid being trapped into paying the extreme interest rates of a payday loan.
Compare the best personal loans
Get the best rates and terms to fit your needs. Here are a few loans we'd like to highlight, including our award winners.
| Lender | APR Range | Loan Amount | Min. Credit Score | Next Steps |
|---|---|---|---|---|
Rating image, 5.0 out of 5 stars.
5.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
Fixed: 8.99%-29.99% APR (with all discounts)
|
$5,000 - $100,000
|
680
|
|
Rating image, 4.0 out of 5 stars.
4.0/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
5.20% - 35.99%
|
$1,000 - $50,000
|
None
|
|
Rating image, 4.5 out of 5 stars.
4.5/5
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair = Poor |
10.49% to 19.49%
|
$2,000 - $30,000
|
720
|
The bottom line
Looking for a loan with no credit is neither fun nor easy. Getting a loan in this situation is, however, possible. If you're looking to get a loan with no credit, go through these recommendations, find the one that fits your situation best, and go for it. If you carefully manage the loan once it's in your hands, you're on your way to building a solid credit score.
Still have questions?
Here are some other questions we've answered:
Loans and credit scores
- What is a good credit score for a personal loan?
- What credit score do I need for a car loan?
- What is a credit-builder loan?
Other topics
The Ascent's best personal loans
Looking for a personal loan but don’t know where to start? Our favorites offer quick approval and rock-bottom interest rates. Check out our list to find the best loan for you.
FAQs
-
Yes, it is possible to get a loan with no credit, but you might have to get imaginative. Talk to your bank or credit union, find a cosigner, or find out if your employer offers paycheck advances to start.
-
No. No-credit-check loans are never a good idea. Better solutions include loans from friends and family, paycheck advances from your employer, and loans created for those with poor credit.
-
Look for banks, credit unions, and online lenders that consider more than a credit score. You can also borrow from friends or family, ask a cosigner to help out, take out a secured loan, get military assistance, or request a paycheck advance.
Our Loans Experts
Dana George has a BA in Management and Organization Development from Spring Arbor University. For more than 25 years, she has written and reported on business and finance, and she's still passionate about her work. Dana and her husband recently moved to Champaign, Illinois, home of the Fighting Illini. And though she finds the color orange unflattering on most people, she thinks they'll enjoy Champaign tremendously.
Fact Checked
Nathan Alderman
Nathan Alderman has worked with The Motley Fool since 2005, making errors his arch-enemies in a variety of roles including a six-year stint as the dedicated fact-checker for The Motley Fool's premium newsletter services. As The Ascent's Compliance Lead, he makes sure that all the site's information is accurate and up to date, which ensures we always steer readers right and keeps various financial partners happy. A graduate of Northwestern University's Medill School of Journalism, Nathan spends his spare time volunteering for civic causes, writing and podcasting for fun, adoring his wife, and wrangling his two very large young children.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Citigroup is an advertising partner of The Ascent, a Motley Fool company. Dana George has positions in Target. The Motley Fool has positions in and recommends Target and Upstart. The Motley Fool has a disclosure policy.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Citigroup is an advertising partner of The Ascent, a Motley Fool company. Dana George has positions in Target. The Motley Fool has positions in and recommends Target and Upstart. The Motley Fool has a disclosure policy.
*Upstart Loan Disclaimer
The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application.
Citi Personal Loan disclaimer:
**Rates as of 10-06-2023 . Your APR may be as low as 10.49% or as high as 19.49% for the term of your loan. The lowest rate quoted assumes excellent credit, and a loan term of 36 months or shorter. Otherwise, a higher rate will apply. For example, if you borrow $10,000 for 36 months at 15.99% APR, to repay your loan you will have to make 36 monthly payments of approximately $351.52.
There is a 0.5% APR discount if you enroll in automatic payments at loan origination. Additionally, existing Citigold and Citi Priority customers will receive a 0.25% discount to the interest rate. If you are in default, your APR may increase by 2.00%. No down payment is required. Rates subject to change without notice.
You must be at least 18 years of age (21 years of age in Puerto Rico). Co-applicants are not permitted. Loan proceeds cannot be used for post-secondary educational or business purposes.
If you apply online, you must agree to receive the loan note and all other account disclosures provided at loan origination in an electronic format and provide your signature electronically.
Credit cards issued by Citibank, N.A. or its affiliates, as well as Checking Plus and Ready Credit accounts, are not eligible for debt consolidation, and Citibank will not issue payoff checks for these accounts. If you are unsure of the issuer on the account, please visit https://www.citi.com/affiliatesproducts for a list of Citi products and affiliates.
*SoFi Personal Loan Disclaimer
Fixed rates from 8.99% APR to 29.99% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.
Loan amounts range from $5,000–$100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-7%, which will be deducted from any loan proceeds you receive.
Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.
Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a Loan.
Impact to credit score: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.