Shopping for quick cash loans is complicated enough as it is. But shopping for a quick cash loan if you have no credit is even more difficult.
There are so many different types of loans, lenders, and terms that you need to research before making your final decision and signing for your loan. But if you have bad credit, or even no credit at all, it makes this process all the more stressful.
No Credit History vs. Bad Credit
There could be a number of reasons why you don’t have a credit score. In most cases, people without a credit score simply haven’t had any open credit accounts long enough to generate a score. Research from the Consumer Finance Protection Bureau found that about 26 million American adults have no histories.1
This means that you haven’t had a credit card, a personal loan, or perhaps you haven’t had any bills in your name. While it is still difficult to get a good loan without a credit score, it doesn’t mean you have bad credit.
If you don’t currently have a credit score, it’s recommended that you open a credit account so that you can start building your credit history, and eventually you’ll have a score. You may be able to find a credit card that you can open without a credit history.
Other options would be to open a joint loan or a loan with a cosigner, this way you can start making payments on a credit account and building up your credit history. When comparing having no credit and bad credit, you’ll find similar challenges and solutions to finding a loan.
Personal Loan Options if You Have No Credit
Having no credit won’t completely bar you from getting quick cash when you need it. If you find yourself in a cash emergency, and you aren’t sure what kind of loans may be available to you, you may want to consider one or more of the following options:
Friend or Family Member Loan
Getting a loan from a friend or relative can be a good option if you’re in a bind and need some fast cash, but can’t get approved by a lender because you don’t have a credit score. The downside here is that borrowing money from someone close to you can strain your relationship if you have a hard time repaying the money.
If this is your best option for fast cash, we recommend having someone draw up a contract for the loan, just like you’d have for a regular personal loan.
No Credit Check Loan
A no credit check loan is a financial solution designed for individuals seeking a loan without having to go through a hard credit check. Unlike traditional loans, no credit check loans bypass the standard credit score evaluation, making them ideal for those with poor or no credit. No credit check loans can also provide a unique opportunity for borrowers who might be ineligible for conventional financing due to their credit background.
No credit check loans are particularly appealing as they can offer a swift approval process. Lenders typically focus on other factors such as employment status and income rather than credit scores. This approach makes getting a loan with no credit more accessible to a wider range of borrowers, especially those who might face rejection from standard loan options.
However, it’s important to approach no credit check loans with caution. They often come with higher interest rates and fees, reflecting the increased risk taken by the lender. Borrowers should carefully consider their ability to repay the loan under these terms.
These kinds of personal loans are becoming much more common than they were even a few years ago. With a peer-to-peer lending (or P2P) you’re essentially just borrowing money from another person rather than a lender, bank, or credit union.
There are several websites that allow you to search and apply for peer-to-peer loans. A few of the most popular P2P lending sites are LendingClub, Peerform, and Upstart. With these loans, you might be able to find someone willing to work with you even if you don’t have a credit score.
Cosigner or Joint Loan
Getting a loan with a cosigner, or even a joint loan may be possible even without a credit history. A cosigner is someone who signs onto the loan contract, promising to make the payments on the loan if you fail to pay. This would likely need to be someone with a decent credit score, to show the lender that they’re creditworthy and capable of repaying the loan.
A joint loan is similar, but in this case the other person is signing for the loan to share equal responsibility in repayment. So instead of the other party only paying in the event that you can’t, they would be making payments with you throughout the life of the loan.
A payday loan is an unsecured loan that many people turn to when they need quick cash. These loans are short-term, meaning they are usually paid back in a very short amount of time. They also tend to carry higher interest rates than other personal loans, since the borrowers who use them tend to have low credit scores.
If you’re considering a payday loan and you don’t have a credit score, you might be able to talk to the lender directly to convince them to give you a chance. If they’re willing to consider offering you a loan, they may require some additional documentation from you such as bank statements, or current income information.
Possible Loan Options for Consumers with No Credit
|Typical APR Range
|Reporting to Major Credit Bureaus
|Typical Loan Amount
|Credit Union Personal Loan
|8% – 18%
|$500 – $50,000
|Online Personal Loan
|10% – 35%
|$1,000 – $50,000
|3% – 36%
|Up to 85% of collateral value
|1% – 14%
|Up to cost of tuition
|Student Credit Card
|18% – 29%
|$200 – $5,000
FAQ: Getting Personal Loans, etc. With No Credit
Secured loans require collateral, like a car or home, which the lender can claim if you default. Unsecured loans don’t require collateral but may have higher interest rates. For those with no credit, secured loans might be easier to obtain.
A secured credit card requires a cash deposit that serves as your credit limit. By using it responsibly and making on-time payments, you can build credit, as activity is usually reported to the three major credit bureaus.
When comparing rates, look at the APR, repayment terms, and any additional fees. Online lenders may offer competitive rates, especially for those with no credit. Ensure you understand the total cost of the loan.
Yes, payday alternative loans, often offered by federal credit unions, are generally more affordable than payday loans. They have lower interest rates and longer repayment terms, making them a safer choice for borrowers with poor or no credit.
Yes, it’s possible to get an auto loan with no credit. Some lenders specialize in loans for those with no credit history. However, these loans might come with higher interest rates. Making a larger down payment can improve your chances of approval.
Credit builder loans are designed to help you build credit. The loan amount is held in a bank account while you make monthly payments. Once the loan is fully paid, you get access to the funds. Timely payments are reported to credit bureaus, helping to build your credit score.
Payday loans can be risky due to their high-interest rates and short repayment terms. They can lead to a cycle of debt if not managed properly. Always consider alternatives and understand the terms before opting for a payday loan.
Set up automatic payments from your bank account or set reminders for due dates. Consistently making on-time payments is crucial for building your credit score and avoiding late fees.
No credit check loans don’t require a credit history review and are often accessible to those with poor or no credit. However, they may come with high-interest rates and fees. It’s important to read the terms carefully and consider if it’s the best option for your financial situation.
Yes, many federal credit unions offer products tailored for members with no credit, including payday alternative loans and credit builder loans. These products usually have more favorable terms compared to traditional personal loans from commercial lenders.
For those with poor credit, a secured loan requires collateral and generally offers lower interest rates. A payday alternative loan, offered by credit unions, may be a more affordable and safer than options from payday lenders, featuring lower fees and longer repayment terms. A credit builder loan is designed to help build credit; the loan amount is held by the lender and released after all payments are made, aiding in credit improvement. Each option caters to different financial needs and should be carefully considered.
A Word About Personal Loans From CreditNinja
Getting no credit check loans might seem like a quick and easy solution if you are looking for a loan with no credit, but these loans often come with high rates and fees. Instead, it’s in your best interest to research lenders and compare offers. You may be able to save a significant amount of money or get a better loan just by looking around! For more great personal finance blogs, check out the rest of the CreditNinja Dojo!