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If you don’t have credit, you may be able to take out a loan — but there’s a catch. You’ll probably need to pay higher interest rates or fees.
Applying for a high-interest loan or line of credit isn’t the only borrowing option available to you, though. You could also consider applying for a credit-builder loan or getting a co-signer to help improve your chances of approval and getting a lower interest rate.
Read on to learn about more borrowing options — including some that could help you get a loan with no credit history and others that can help you build credit.
- Is it possible to get a loan with no credit?
- Four best lenders that offer no-credit loans
- Alternatives to no-credit loans
- Why is it difficult to get a loan with no credit?
- Hear from an expert
Is it possible to get a loan with no credit?
Yes, it is possible to get a loan with no credit or bad credit, but lenders will likely charge you a higher interest rate than if you had established credit history.
Here are some options to explore if you’re looking for a no-credit loan.
Some lenders may offer loans without checking your credit.
For example, you usually don’t need a credit history to get a payday loan; instead, you must show that you have a bank account and regular income. (Requirements will vary based on the lender.) But applying for a payday loan should be a last resort, since payday lenders often charge fees that equate to annual percentage rates, or APRs, of around 400% — and higher in some cases. And if you can’t repay the loan when it’s due, you may have to pay a fee to renew the loan.
The high interest and fees of these short-term loans — and the likelihood that a payday loan will be renewed repeatedly — mean that you may end up paying far more than you originally borrowed.
Some online lenders offer no-credit-check installment loans. While you may be able to repay this type of short-term loan over several months rather than by your next payday, the interest rates are still usually very high.
Some auto dealerships also offer no-credit-check loans, also referred to as “buy-here, pay-here” loans. The interest rates on these types of loans may be significantly higher than those offered by other lenders. And the dealership may require you to borrow more than the value of the car, causing you to overpay. Because of their high interest rates and fees, buy-here, pay-here loans should also only be considered as a last resort.
You may have no credit because you haven’t borrowed money yet or because you’ve borrowed from lenders that don’t notify the credit bureaus about payments.
Payday alternative loans
Some federal credit unions offer payday alternative loans in amounts ranging from $200 to $2,000. Some credit unions offer these loans without performing credit checks. Fees for payday alternative loans are capped at $20, and interest rates are also capped.
Repayment terms can range from one month to 12 months.
Four best lenders that offer no-credit loans
If you need money for an emergency, you might not have time to build credit before applying for a loan. Here are some lending options to consider.
- Earnin — If you’re employed or receive unemployment benefits and meet other requirements, Earnin may be a good choice for a small amount to tide you over until your next check. The Earnin app advances new borrowers up to $100 (and repeat customers up to $500). It also doesn’t charge mandatory fees or interest — instead you tip what you think is fair.
- Oportun — This lender says you may qualify with no credit history and offers both unsecured and secured personal loans. Oportun says it will check your credit but considers other factors as well. The company reports your payment history to credit bureaus, so it can help you build credit with full, on-time payments.
- Stilt — This lender focuses on providing loans for immigrants and the “underserved.” You can apply even if you don’t have a Social Security number yet. The company says it analyzes information such as your work experience, income and financial habits.
- Brigit — If you don’t mind a monthly membership fee, Brigit will advance you up to $250. The app also offers features such as a spending tracker and auto advances in case it predicts you’re in danger of overdrafting your account and need fast cash.
Alternatives to no-credit loans
Before applying for a personal loan with no credit, consider other options. These might include asking someone to co-sign a loan or taking steps to build your credit before applying for a loan.
Get a co-signer
If you don’t qualify for a loan by yourself, you may consider asking someone to co-sign for you. If you borrow with a co-signer and then pay back the loan as agreed, your payments will help your credit history. You also may get a more favorable interest rate with a co-signer.
Apply for a secured credit card
Another way to build credit is to apply for a secured credit card. You’ll deposit some money, usually $300 or less — if you’re approved, the issuer then gives you a credit card with a limit that typically matches your deposit amount. After you make regular, on-time payments over a certain period of time, the issuer might offer you an unsecured credit card — assuming it offers unsecured cards. Some issuers notify the three major credit bureaus about payments on secured cards, which can help you establish a credit history.
Apply for a credit-builder loan
Some financial institutions help people build credit with credit-builder loans. Unlike conventional loans that give you cash upfront to spend (if you’re approved), these loans put the amount you borrow — usually between $300 and $1,000 — in a restricted savings account. You then pay off the loan in installments (like monthly payments), and the lender reports your payments to the three major credit bureaus to help you establish a credit history. After you finish paying off the loan, you get the full amount you paid back.
Apply for a secured loan
You may have a better chance of qualifying for a loan — or getting a better rate — if you put up collateral for a secured loan. Some lenders offer secured personal loans if you put up collateral such as a vehicle or a savings account.
But be aware that if you default on your loan, you may lose your property. And think carefully before you take out a title loan. These short-term loans often have APRs around 300% but put your vehicle at risk if you can’t make repayments.
Why is it difficult to get a loan with no credit?
People may not have a credit history because they haven’t had any activity reported to the major consumer credit bureaus — or because the bureaus have so few details on them that it’s not possible to give them a credit score.
Lenders like to check credit scores because they provide a snapshot of how likely someone is to repay a loan or make timely payments on a credit card. Most lenders review credit reports before making a lending decision, meaning you’ll have a harder time borrowing money if you have no credit.
Loans for people with no credit usually have high interest rates or fees, so think carefully about whether you can afford them. Consider drawing on savings or asking a family member to co-sign instead of taking out a loan by yourself.
As you work toward building credit, it’s a good idea to check your credit reports regularly. And if you find any errors in your newly reported activity, contact the credit bureaus to dispute the error.
Hear from an expert
Q: What would you recommend for someone who needs a loan but has no credit?
A: In that case, they will need to provide sources of their income and the amount and other assets that can be used as collateral. Home title, car title can be used in lieu of no credit.