Getting a Loan With No Credit: 5 No-Credit-History Loans

Building credit takes time, but sometimes you can’t wait. Whether you’re a recent graduate, new to the U.S., or have simply avoided credit cards or loans, having no credit history can make getting approved for a loan difficult. That’s because lenders typically use your credit report to assess how likely you are to repay your debts. But if you haven’t built up a history of borrowing money and paying it back, they have no record to refer to. 

Fortunately, not all lenders require a credit history or a good credit history if you need a loan. We’ll walk through the practical steps to getting a loan without having an established credit profile, cover the types of loans available, and offer tips on how to build credit while avoiding predatory lending practices. 

5 loans for no credit history

Methodology

Credible evaluated 31 lenders across 899 points of data to find the best no-credit history loans. We began by eliminating lenders that have a minimum FICO credit score requirement above 580 on Credible and on their website. (For example, Upstart has no minimum credit score requirement on their site and so made the list.) We scored the remaining lenders based on the following categories:

• Rates and fees: 18%
• Loan terms: 18%
• Customer experience: 17%
• Eligibility: 14%
• Customer satisfaction: 10%
• Efficiency: 10%
• Options for poor credit and no credit: 9%
• Discounts: 4%

Data was collected from lender websites, our partners, customer review aggregator websites, and third-party review sites like Trustpilot and the Better Business Bureau. In evaluating lenders, we also considered internal proprietary data, such as average interest rates by credit score tier and average approval rates. Each data point was verified by a senior editor.

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.

Can you get a loan with no credit history?

It’s possible to get a loan with no credit history, but you need to be intentional in your efforts. In other words, it’s important to find lenders that will consider your application and to prequalify first, to get a sense of whether you’re likely to be approved. 

Several lenders consider “credit invisible” borrowers, and some employ AI underwriting, such as Upstart, to identify borrowers likely to repay a loan despite not having established a credit history. Lenders offering no-credit-history loans might rely on your income, employment history, and banking history instead of your credit score when evaluating your application.

Personal loan interest rates for bad credit

You might not have “bad” credit (as in you haven't defaulted on any debt or made late payments). But if you get approved for a loan with no credit, you might be approved at similar rates. Here are the average rates borrowers with FICO scores less than 580 were approved for on the Credible personal loan marketplace over the past year. 

You can see that rates vary somewhat by loan purpose; borrowers, on average, got the lowest rates for car repair and home improvement loans. Car repair loans are typically the smallest loans approved on Credible, so they tend to have lower interest rates. But regardless of what you’ll use the money for, you should expect a rate above 30% APR, if you’re approved for a loan with bad credit.

Best loan options for borrowers with no credit

One size doesn’t fit all when it comes to no-credit-history loans. 

Unsecured loan

An unsecured personal loan may be the hardest loan to qualify for with no credit history, but it’s also the most widely available type of personal loan. Look for lenders with no credit score minimum (or a low credit score minimum) and prequalify to get a sense of whether you’ll be approved, for how much, and at what rate. Unsecured loans don’t require collateral and can be funded within days. But you’ll usually need to authorize a hard credit inquiry when you apply. 

Where to find an unsecured loan and rates: Look online for lenders willing to work with borrowers with bad credit and with no credit history. Rates on personal loans are typically capped at 36% on the high end. Bad-credit borrowers tend to get approved for rates above 30%, according to Credible data.

Secured loan

A secured loan requires collateral, such as your savings account or a car. Because the lender can recover the collateral if you default, lenders are more willing to approve applicants with no credit. 

Where to find a secured loan and rates: OneMain Financial offers personal loans you can secure with your vehicle. If you’re a credit union member, see if your CU offers savings-secured loans. You could get a very low rate (below 10% APR) on a personal loan if it does, though your savings account would be used as collateral for the loan (so don’t default). 

Credit-builder loan

This small loan is specifically designed to help you build credit. Instead of receiving the loan upfront, the funds are held in a secure account while you make monthly payments. Your on-time payments are reported to the credit bureaus, thereby improving your credit history and score. Once the loan is paid off, the funds are released to you.

Where to find a credit builder loan and rates: Credit builder loans are often available from credit unions at much lower rates relative to traditional personal loans. If you got a credit builder loan today, you might pay around 5% APR.

401(k) loan

A 401(k) loan lets you access money that’s in your 401(k) account without having to pay taxes or an early withdrawal penalty. The catch is you have to put it back into the account via regular (at least quarterly) installments plus interest. The interest you pay also goes into your account. 

If your plan allows 401(k) loans, you can borrow up to 50% of your vested account balance or $50,000, whichever is greater. If 50% of your vested account balance is less than $10,000, you can borrow up to $10,000. There’s no credit check with a 401(k) loan, which makes them a good option if you need money with no credit history. 

Where to find a 401(k) loan and rates: Check with HR to see if your plan allows 401(k) loans. The rate on a 401(k) loan is typically the prime rate plus 1% to 2%. The prime rate is currently 7.5%; an 8.5% or 9.5% interest rate on a loan is likely much lower than what you’d be eligible for with a traditional lender.

Payday alternative loan (PAL)

Payday alternative loans are available from some federal credit unions. There’s often no credit check and loan amounts are available up to $2,000 with repayment terms up to 1 year. Since credit unions generally report payments to the credit bureaus, a PAL can help you establish a good credit score and history. 

Where to find a PAL and rates: PALs are exclusively available from credit unions and APRs are capped at 28%. If you need a small loan and are (or can become) a member of a credit union that offers PALs, this can be a great way to borrow money and improve your credit.

Small bank loan

Some banks offer small, short-term loans to existing customers without a credit check. For instance, Bank of America offers small loans up to $500 for a flat $5 fee; the loan is repaid over three months. U.S. Bank offers loans up to $1,000 to existing customers, also with a three-month repayment term. Your bank may or may not report repayment to the credit bureaus.

Where to find a small bank loan and rates: Check with your bank (or credit union) to see if it offers small short-term loans. Each bank works differently, but it’s likely you’ll be charged a fee to borrow, as opposed to an interest rate. Use a short-term loan calculator to make sure the fee is reasonable for the term of the loan. 

How to get a personal loan with no credit history

If you're ready to apply for a personal loan, follow these steps:

1. Research lenders: Start by looking for lenders that don't require a minimum credit score or that allow cosigners. A cosigner is someone with good credit who's also responsible for repaying the loan — a lender is more likely to approve your application if someone with good credit is on it.
2. Prequalify: Prequalification can give an idea of what you'll qualify for, and it won't hurt your credit score (if you have one). But it's not an offer of credit, and not all lenders let you prequalify before applying.
3. Compare prequalification quotes: Compare annual percentage rates (APRs) between lenders you’ve prequalified with to see which may have the lowest borrowing cost. Also consider monthly payments, repayment terms, funding times, fees, and discounts. If a lender charges an origination fee, that amount will be deducted from the loan proceeds, which means you'll receive less than the full amount.
4. Apply: Once you've landed on a lender to apply with, fill out a full application. The lender may ask for documents to support your application, including bank statements, pay stubs, and a government ID. Applying for a loan can temporarily decrease your credit score because most lenders run a hard credit check.
5. Review the loan agreement: If approved, the lender will make a loan offer, which could be different from the prequalification quote you received. Review the agreement to make sure the loan amount, APR, repayment period, monthly payment, and fees are as expected.
6. Await funding: It might take from one to three business days to fund a personal loan — though some lenders can send money the same day you're approved.

What to do if you can’t qualify for a personal loan

If you’re struggling to get approved or have been denied a personal loan, the following tips can improve your application or set you up for success in the future:

• Consider applying with a cosigner or co-borrower: If someone with good credit is willing to cosign your application, the lender will also hold them responsible for repayment. Since there’s less risk to the lender, it may be more likely to approve your loan. If you can’t find a lender that offers cosigner loans, a joint personal loan could offer a similar solution.
• Improve your credit score: Use a secured credit card or a credit builder loan to build a credit history and improve your score gradually. You might also ask a family member with good credit (perhaps a parent) to add you as an authorized user on their credit card. This will add their credit account to your credit report, which could have a swift and positive impact on your score. 
• Seek a payday alternative loan or a small bank loan: You might have options to get a small, short-term loan at your bank or credit union without a credit check. Ask whether your payments will be reported to the credit bureaus.

Watch out for predatory loan practices

Not all “no-credit” loans are safe. Some lenders target people with no credit history using high fees and deceptive terms. 

How to spot predatory lenders

Any of these are red flags, and it’s likely the loan is not in your best interest and could even be a scam.

• Extremely high interest rates (APRs over 36%)
• Vague or confusing terms
• Guaranteed approval
• Pressure to borrow more than you need
• Upfront out-of-pocket payment required
• High-pressure sales tactics
• Rates or terms that are too good to be true

How to build credit history

Building a good credit history not only helps you qualify for loans, it also can help you get approved to rent a home, avoid paying deposits on services, and even qualify for certain jobs. Here’s how to build credit history:

• Take out a secured loan: When you get a secured personal loan, you attach an asset, such as a car or savings account, to the loan as collateral. A small secured loan — with an equally small payment — can be an affordable and manageable way to show lenders you’re a responsible borrower; and since your collateral reduces the lender’s risk, you’re more likely to qualify. Note that if you default on your loan, the lender can take your collateral.
• Apply for a credit-builder loan: When you apply for a credit-builder loan, the lender deposits a small amount of money into a locked savings account, which you pay back over 6 to 24 months. At the end of the repayment term, you’ll receive the funds. Loan payments are reported to the credit bureaus, so it’s important to make them on time.
• Get a secured credit card: A secured credit card has a line of credit equal to an amount you deposit with the company. After you show that you can make on-time payments, you might be able to get your security deposit back, increase your credit limit, and even upgrade to an unsecured credit card.
• Become an authorized user: Having a family member or friend add you as an authorized user on their credit card can help you piggyback off their good credit. Avoid using the account since the purpose is to improve your credit by adding their account to your report.

How to monitor your credit

You can monitor your credit by:

• Using credit monitoring tools: You can get a free credit score and analysis plus debt tracking using Credible’s credit monitoring tool. Credit Karma and Experian also offer free credit tracking services. 
• Check your credit report: Visit AnnualCreditReport.com for free weekly reports from each of the credit bureaus. 
• Set up alerts: You often can set up alerts on your existing accounts to monitor and be notified of transactions and unexpected activity. If you suspect fraud, you can set up a fraud alert with the credit bureaus or freeze your credit to block anyone (including you) from opening new credit accounts.

Disclosure: Some lending partners that participate in Credible’s comparison marketplace offer loans to borrowers with scores as low as 550. Borrowers with low scores will have fewer lending options than borrowers with higher credit scores.