Yes, it’s possible to get a loan with no credit score! While most lenders consider your creditworthiness and income during the approval process, many have flexible qualification requirements. Individuals with low or no credit can be eligible for fast cash as long as they can provide proof of steady income.
If you can demonstrate that you can make monthly payments on time, you may get access to a lump sum to use for emergencies! The documents you can use as proof of reliable income vary by lender. However, many financial intuitions accept paycheck stubs, bank statements, government award letters, recent tax returns, etc.
Keep in mind that you will likely not get the maximum loan amount from the lender as a new borrower. Large loans are typically only given to borrowers with a long history of successfully managing their finances. When you first start using credit, your loan amounts will be small. Smaller loans reduce the lending risk for the lender and prevent you from taking on more debt than you can handle.
Prospective borrowers with no credit often settle for payday loans because credit is not essential during the approval process. While payday loans are generally easy to obtain, they offer many disadvantages. The interest rates are excessively high, and loan repayment periods only last two weeks. Two weeks is often not enough time to pay back the money you borrow plus interest charges. Many payday loan borrowers end up stuck in a debt cycle due to predatory lending practices.
Personal installment loans are a better alternative for new borrowers with no credit. While credit scores are one of the main qualifying factors, you can get loan approval if you have a steady source of income. Personal loans offer short or long-repayment terms and decent interest rates. Between an installment loan vs. a payday loan, the best choice is clear if you need emergency cash.
Many Americans are invisible credit, meaning they either have no credit history or very limited financial activity. According to Experian, it can take three to six months of financial activity for a new borrower to get a credit score. By simply paying your monthly loan payments on time, you can start to build good credit in no time!