Sometimes we need money to prevent a minor problem from causing larger ones or cover an unexpected expense. In such situations, a personal loan could be the best option.
However, can anyone take a personal loan? Can you take out a loan if you don’t have a credit history? Yes, you can get a loan with no credit history, but it can be challenging. Also, these loans usually carry unfavorable terms and high rates.
Nevertheless, no credit check loans can certainly help you in times of need.
Why Don’t You Have A Credit History?
Not having a credit history does not essentially mean you have bad credit. One explanation could be that credit bureaus don’t have sufficient information about your credit history to give you a score or.
Other reasons why you may not have a credit score include:
- You recently moved. You might have a good score in your home country. But when you move to the U.S., you need to start building your score from scratch.
- There’s no activity on your credit within the past two years.
- Keep in mind that the credit bureaus need to see activities on your accounts to formulate a score. So make sure your credit accounts stay active by paying the bill on time and using them occasionally.
- You have never used traditional accounts. You will not have a credit history if you have never had a credit card or taken out a loan. Hence, credit bureaus have nothing to assess.
Getting A Loan With No Credit History
The process of getting a personal loan can vary depending on the type of loan and the lender. Some creditors have smooth and efficient online applications with detailed instructions you can follow. Or, you might have to visit a local office and talk to a loan officer.
Although you can get a loan with no credit check, you still need to prove your income source and identity. Also, you may need to provide other necessary documentation before applying, such as:
- Professional and personal references
- Educational history
- Recent bank statements
- Employment history
- Employer’s contact information
- Proof of income
- Valid government-issued ID
Types of Personal Loans to Consider
Opt for an online lender for no credit check loans. These lenders primarily operate online and have no physical locations. Because the costs of running the business are low, it allows them to offer affordable, competitive rates compared to banks.
Applying for a loan with an online lender only takes a few minutes. And if you get approved, you can even get the money the same day.
The following are the types of personal loans you can get with no credit checks:
- Payday Loan. This short-term loan requires you to repay the principal amount plus the interest rate on your next payday. It’s suitable for you if you want to borrow a lower amount of money. Be sure to pay the loan on time; otherwise, it will roll over, which means you will end up paying more than what you originally owed.
- Peer-to-Peer Loan. Institutions or individual investors generally fund this type of personal loan. There are a few lenders who won’t check your credit score and will approve your loan application. But, you may have to present some other documentation.
- Title Loan. A title loan is the best option if you need more time to repay the loan and need a bigger loan amount. These loans are taken against the value of your collateral, which can be your car, house, or gold. You can still use your collateral item, but if you fail to pay the loan, the lender will repossess your asset as payment for your loan.
Alternatives to Personal Loans
If applying for a personal loan is impossible, consider the following alternatives:
- Ask your close friends or family members to lend you some money. Be sure to write up an agreement so that they have a guarantee that you’ll pay back.
- Persuade a friend or family member to cosign a personal loan with you. You will need someone with an excellent credit score. Make sure to pay off the loan, or you risk jeopardizing both your credit scores.
- Ask your employer for a paycheck advance. However, don’t confuse it with a payday loan. A cash advance is paid off through deductions from your future salaries.
If you need to cover sudden or immediate financial needs but don’t have a credit history, you can always take out a personal loan. The key here is to look for creditors that focus on other factors rather than your credit score, such as your job or income source.