Are Loans for People with No Credit a Possibility?
The irony in getting your first loan or opening your first credit card is that you need credit. But you can’t build credit without a loan or a credit card. That is why finding loans for people with no credit history is so difficult.
If you need to get loans with poor credit or no credit history – it won’t be impossible. This year’s guide on how to get loans for people with no credit history will help you figure it out.
We will tell you:
- How to get a loan with no credit
- Where to get a loan with no credit
- The best place to get a loan with no credit for you
- Whether or not you should consider bad credit or no credit check loans from payday loan centers
- How to get a loan with no credit when it comes to a mortgage
At this end of this guide, you should feel more confident in understanding loans for people with no credit.
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What Is Credit?
Because we will talk a lot about loans for people with no credit and bad credit and how to get a loan with no credit, it is important to understand what credit is.
Your credit score is a number you are given by credit agencies, telling potential lenders how good you are at making payments on time or paying back loans.
The higher your score, the more lenders trust you. This means you can get more loans at better interest rates.
Here are the credit score ranges:
- Excellent = 750 +
- Good = 700 to 749
- Fair = 650 to 699
- Poor = 550 – 649
- Bad = 550 and below
Normally, people in the bad category, and even some people in the poor category, will struggle to get loans with poor credit in the same way someone may struggle to get a loan with no credit. Even if they can get one, the interest rate is typically extremely high.
The information below on how to get loans for people with no credit applies to those with bad credit, too.
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Loans for People with No Credit: 5 Options
The truth is that people searching for loans for people with no credit history or poor credit history have extremely limited options. You cannot just go out and get a loan with no credit whenever you want for any situation you have.
But that does not mean you are entirely out of options.
Below are five options if you want to know how to get loans for people with no credit and where to get a loan with no credit:
- No credit check online loans (AKA payday loans)
- Cosigners
- Other assets
- Credit builder loans
- Credit-building activities
Then, we will wrap up with a discussion of mortgage loans for people with no credit history, something that is entirely different.
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Get a Loan with No Credit Check: Payday Loans
Want to know where to get a loan with no credit? Your first option to get loans with poor credit or no credit is the easiest, but that does not mean it is a perfect option.
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Payday loans, also known as bad credit or no credit check loans, have a reputation for being terrible, yet they are arguably the best place to get a loan with no credit – especially if you need one quickly.
This is how these types of loans for people with no credit work:
- Payday loans are short-term tools for getting money quickly.
- You put up some sort of collateral, so the company knows borrowers will pay back their no credit check online loans (Examples: you give them a post-dated check, they hold on to your current paycheck, etc.).
- The loan goes into your bank account.
- You must pay it back in the agreed-upon time or interest rates will skyrocket (the average interest rate is an unbelievable 400%).
This method allows you to get a loan with no credit because most of these companies do not run a credit check.
However, they come at a cost. Because these are no credit check online loans, they do not know if you are trustworthy to pay it back or not. Even if you pay it back on time, you will still be hit with a financing fee.
This high cost is exactly why these bad credit or no credit check loans should be your last resort.
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Find a Co-Signer
You will quickly find that in almost every personal loan case, finding loans for people with no credit (outside of the bad credit or no credit check loans above) is next to impossible.
One way to go around it is getting a cosigner. This is a good option for people who need to get loans with poor credit as well.
- A cosigner is somebody who has good credit.
- Cosigners join you in signing off your loan.
- By doing so, cosigners promise to pay back your loan if you fail to do so.
This can be an option for auto loans. And due to the student’s age, this is one of the more common methods for student loans for people with no credit history.
So instead of figuring out where to get a loan with no credit or desperately searching for the best place to get a loan with no credit, you can now get a loan anywhere.
The hard part is finding somebody who is willing to be responsible for your loan if you do not (or cannot) pay it back.
Have Other Assets
Sometimes when you are looking for loans for people with no credit, you will need to have something else to offset your lack of a credit history in order to land loans for people with no credit history.
The Lending Mag talks about the four C’s of a loan you should consider if you need to get loans with poor credit or no credit:
- Credit
- Character
- Collateral
- Capacity
Without credit, it is possible these others may stand strong so you can get a loan with no credit. For example, if you have a full-time job with a high salary and plenty of savings, you could be okay.
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Often these loan options – like car loans – will come with a higher down payment in this situation.
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Apply for a Credit Builder Loan
If you want to get a loan with no credit or poor credit, but want to stay away entirely from bad credit or no credit check loans at payday loan centers, here is another option for loans for people with no credit history.
Some credit unions or banks will offer very small loans for people with no credit or poor credit with the purpose of letting customers build up their credit.
Not every bank or credit union will offer you this option, so you will have to do some research on where to get a loan with no credit in your area.
Sometimes you can get an unsecured credit builder loan:
- These will be small amounts.
- Normally, you will also need to set up an automatic payment transfer to give the bank an extra level of security.
- Once you pay back this small loan, you will have built some credit.
This your best alternative to no credit check online loans from payday loan centers.
There are two other types of credit builder loans, but they do not give you money in your pocket. They only exist to build your credit. We will talk about those two below.
Build Some Credit Quickly
Without a doubt, one of the best options if you are now searching for loans for people with no credit is to stop and then to build credit quickly. The same is true for those needing to get loans with poor credit.
If there is any way you can survive without going to a payday loan center and getting no credit check online loans, you are in luck. There are some ways to build credit quickly even if you do not have any credit right now.
Then you can have many loan options available to you, not only bad credit or no credit check loans.
To avoid the not-so-great loans for people with no credit history altogether, build you credit these ways:
- Get a credit-builder loan (one option): Here is the second type of credit builder loans for people with no credit. You give the bank money – say $500 – and they hold onto that money as collateral. Your loan will be for $500, and if you pay back your loan, you build credit. If you do not pay back your loan, the bank is safe because they have your collateral.
- Get a credit-builder loan (another option): The bank may also give you a loan based off the amount of money you already had in their bank. If you fail to pay off the loan, they will take the money in your account.
- Get a secured credit card: This type of credit card requires that you put in a cash deposit first. Then, you use the credit card as normal, and the company reports your actions to the credit bureaus.
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What About a Mortgage Loan?
So far, we have covered ways to get loans for people with no credit when it comes to bad credit or no credit check loans, personal loans, student loans, auto loans, etc. But one of the biggest loans of all – a mortgage – is an entirely different thing when it comes to loans for people with no credit history.
If you want to get a loan with no credit (or bad credit) in order to buy a home, you do have a few options:
- FHA: The Federal Housing Administration will offer some loans for people with no credit or poor credit. They do have some guidelines you must follow, such as no delinquencies on payments of your rental home/condo.
- Payment History: If you do not have a credit history, talk to your current landlord about creating a rental history for you. Sometimes this information can help you, especially when you are going to a smaller bank or credit union.
Talk to your bank or lender to see what their requirements are. If they absolutely do not offer mortgage loans for people with no credit, you will have to look to the government or keep renting for now.
In that case, the government would be your best place to get a loan with no credit. Then, check out our ways to build credit above and work on boosting that score.
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Conclusion: Getting Loans for People with No Credit
Now that you have seen what the options are for getting loans for people with no credit history, you can start to figure out what is the right choice for your finances.
- If you have no choice and need immediate cash, you may have to choose no credit check online loans through a payday loan center.
- If you have a lot of cash, you may be able to negotiate a large down payment.
- If you have time to wait, you can try one of our credit-building ideas.
But no matter what, know that while loans for people with no credit may be more difficult to find, they are not impossible! Try the best place to get a loan with no credit for your particular situation today.
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