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

Needing to borrow money is a reality for many Americans. But if you don't have a credit history, it can be tough to qualify for a loan. Knowing where to look and which lenders to try is key. Upstart and One Main Financial are our two top picks for no-credit-history loans since neither requires a minimum credit score and both offer secured loans.

However, the best personal loan option for you depends on your situation. Secured loans, credit-builder loans, and loans that allow cosigners are just a few of the options for those with insufficient credit histories.

5 loans for no credit history

Methodology

Credible evaluated 31 lenders to find the best no-credit history loans. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. We chose the best lenders based on the following weighted 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%

Each data point was verified by a third party to make sure it was accurate and up to date.

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

Can you get a loan with no credit history?

According to research by Experian and management consulting firm Oliver Wyman released in 2022, a combined 49 million Americans don't have a conventional credit score.

• 28 million are "credit invisible" with no documented credit history
• 21 million are "unscorable" because they haven't used enough credit to have a credit score

Without a credit history, getting a loan is more difficult, but not impossible.

"When an applicant presents no credit history, they're a blank slate," explains Stephanie Robb, CCUE, Director of Lending Services at BluCurrent Credit Union. "We don't know how they'll perform on upholding their commitment to repayment." Luckily, there are still options available to borrowers without a credit history.

Some lenders, like Upstart, may not require a credit history when approving loan applications. These lenders consider other factors to determine whether to approve a loan. According to Robb, some of these factors include length of employment, length of time at their residence, cash down offered, debt ratios, if the request is reasonable, if there is collateral offered, and relationship to the lender.

"If the [borrower] doesn't have any of these, then most lenders will require a strong, qualified (qualifications set by each lender) co-applicant to apply jointly," says Robb.

In addition to unsecured personal loans, you can consider other loan types, like secured loans, credit-builder loans, or 401(k) loans. But while these loans may be easier to qualify for, they have other risks to consider.

Related: What Credit Score Do You Need for a Personal Loan?

Best loan options for borrowers with no credit

If you need to borrow money but don't have sufficient credit history, consider the following options.

Secured loan

"Without a credit history, lenders don't have much to work with," says Joe Camberato, CEO of NationalBusinessCapital.com. "They don't know how you handle debt, so they're taking a big risk. Most lenders won't do that unless they have something to fall back on."

That's where secured loans come into play. These loans require you to put up collateral — typically a home, car, or another asset of value — in order to borrow. "These assets give them some protection," says Camberato. "If you can't pay, they have something they can use to recover their money." Because of the collateral, secured loan lenders might be more likely to work with borrowers who don't have credit history.

Learn More: What Can Be Used As Collateral for a Personal Loan?

Credit-builder loan

A credit-builder loan works like a personal loan, but in reverse. When you take out a credit-builder loan, the lender deposits the funds into a locked account. You then make regular payments, which the lender reports to one or more credit bureaus, until you pay off the loan. Then you receive the money.

This type of loan can help you build credit over time, but it's not practical if you need cash now.

401(k) loan

A 401(k) loan allows you to borrow money from your retirement account, which you'll later have to repay along with interest. This alternative comes with significant risk. 

Not only does a 401(k) loan take away from your retirement savings, you may have to pay taxes and additional penalties if you don't repay the loan on time. Plus, if you change jobs, you may be required to repay the entire loan.

If your 401(k) plan allows loans, you can borrow up to 50% of your vested balance or $50,000, whichever is less. Some plans allow you to borrow up to $10,000 if 50% of your vested balance is under $10,000. Repayment periods are five years.

Compare: 401(k) Loan vs Personal Loan

Payday alternative loan (PAL)

Payday alternative loans, or PALs, are short-term loans that are available to members of some federal credit unions. There are two types, PALs I and PALs II, with differing terms and loan amounts. 

PALs I range from $200 to $1,000 and have a maximum term of six months, while PALs II are available up to $2,000 and have terms of one to 12 months. Both loan types have a maximum rate of 28%.

PALs may be a good alternative for existing credit union members with small borrowing needs, but they won't work for those who need more than a couple of thousand dollars.

How to get a personal loan with no credit history

Getting a personal loan with no credit history might be tough, but it's still possible. If you're ready to apply, follow these four steps:

1. Research lenders: Be sure to compare multiple lenders to find the right loan for you. 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: Once you've found lenders you might qualify with, take the first step to find out by prequalifying with them. 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 lenders: Compare annual percentage rates (APRs) between lenders to see which may have the lowest cost to borrow money. Also consider the repayment terms and loan amounts you might qualify for, as well as funding times, fees, and discounts. Note that if a lender charges an origination fee, that amount will likely be deducted from the loan proceeds, which means you'll receive less than what you applied for.
4. Pick your loan option: After comparing lenders, choose the loan option that best suits your needs.
5. Complete the loan application: Once you've found a lender, you'll need to fill out a full application and submit any required documentation, such as bank statements or pay stubs. If you're applying with no credit history, you might also need to provide your employment history or other information, depending on the lender. If you have a credit score, submitting a formal loan application could temporarily decrease it — usually by no more than 5 points.
6. Review the loan agreement: If you're approved, the lender will have you sign for the loan so you can get your money. Review the agreement to make sure the loan amount, repayment period, and fees are as expected.
7. Receive your funds: It usually takes less than a week to fund a personal loan — though some lenders can send money on the same or the next business day after you're approved.

Plus, signing up for automatic payments might get you a rate discount — often 0.25 percentage points, depending on the lender.

No matter what type of personal loan you choose, be sure to consider how much the loan will cost you over time. You can estimate how much you'll pay for a loan using a personal loan calculator.

Related: How To Get a Personal Loan

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

If you’re still having a hard time qualifying for a personal loan with no credit history, here are a couple other options to consider:

1. Find a cosigner: Having a cosigner with good credit could mean the difference between getting approved for a loan and getting rejected. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d qualify for on your own. A cosigner is usually a good friend or family member who’s willing to put their credit on the line for you.
2. Apply for a credit-builder loan: A credit builder loan is similar to a regular personal loan, but works in reverse. Instead of getting the loan funds upfront, you make monthly payments for a specified period of time — which are reported to the credit bureaus — and then get your loan funds. Credit-builder loans can be a great way to demonstrate that you're a responsible borrower while improving your credit, but only work if you can wait for the funds. Terms typically last from 6 months to 2 years. 
3. Apply for a secured loan: While many personal loans are unsecured, some lenders also offer secured personal loans that require collateral, such as a car or other valuable item. These types of loans are less risky for the lender, which could make it easier to get approved even if you don’t have a credit history. A secured personal loan might also come with lower interest rates compared to unsecured loans. But if you fail to make your loan payments, the lender can take your collateral.

Learn More: Was Your Personal Loan Application Denied? What To Do Next

Watch out for predatory loan practices

While some trustworthy lenders offer no-credit-history loans, you also need to look out for predatory lenders.

For example, if you’re looking for a personal loan that doesn’t require a credit history, you should generally avoid the following types of loans:

• Pawn shop loans
• Payday loans
• Cash advance loans

These types of loans often charge exceptionally high fees — sometimes equating to an APR of 300% to 500%. They can also trap you in a cycle of debt that takes even longer to pay off.

Plus, most of these lenders don’t report on-time payments to the credit bureaus, which won’t help you build credit that could make you eligible for better loans in the future. But if you’re late or miss a payment, the lender could send your debt to a collections agency, which would likely report it to the credit bureaus.

How to spot predatory lenders

Here are several personal loan warning signs to keep an eye out for:

• Not requiring a credit check: Legitimate personal loan companies typically review your credit to determine how likely they think you are to repay a loan. While some short-term loans — such as payday or pawn shop loans — don’t require a credit check, others could be a scam.
• Demanding upfront payment: Unless it’s a legitimate credit-builder loan, you shouldn’t have to pay money before you get your loan funds. Also watch out for scammers wanting you to pay through unusual methods that can’t be tracked, such as with a prepaid credit card.
• Using high-pressure sales tactics: Scammers might use language like “limited-time offer” or “act now” to push you into making a fast, uninformed decision.
• Approaching you about the loan: While legitimate companies sometimes advertise loan offers through the mail, a company or individual approaching you out of the blue with a loan offer might not be legitimate.
• Lacking a physical location: A real, vetted loan company should be able to provide a physical address that you can verify. If not, it might be a scam.
• Not feeling comfortable: Trust your gut — if something seems off, it probably is.

You can also review the lender’s Better Business Bureau (BBB) reviews — though keep in mind that the BBB isn’t a definitive source for determining whether a lender is legitimate.

Learn More: How to Check If a Personal Loan Company Is Legitimate

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 are a few ways to build credit history:

• Take out a small secured loan: When you take out a secured personal loan, you provide the lender with an asset, such as a car or savings account. A small secured loan — with an equally small payment — can be an affordable and manageable way to show lenders you’re a responsible borrower. Note that if you default on your loan, the lender could 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 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. You’ll receive your own card, but you don’t have to use it for your credit to improve. If you do use the card, make sure you’re set up with a way to make on-time payments.

How to monitor your credit

As you build your credit, it’s a good idea to monitor it. This can help you keep an eye out for fraud. Here are a few ways to do this:

• Review your credit reports: You’re entitled to a copy of your credit report from each of the three credit bureaus every 12 months. You can use Credible's credit monitoring tool to review your credit reports for free. If you’d like to review your credit throughout the year, you might consider accessing a report from one of the credit bureaus every four months.
• Sign up for a credit monitoring service: Several services are available that allow you to monitor your credit — some are free, while others charge a fee. For example, Experian provides free credit monitoring and also lets you have other bills (such as cellphone or utility bills) reported to the credit bureaus, which could also improve your credit score.
• Check with your bank or credit card issuer: Many banks and credit card issuers provide free updates to your credit score and credit report.

Read More:

• How Much of a Personal Loan Can I Get?
• How Long Does It Take To Get a Personal Loan?
• How To Improve Your Personal Loan Application
• Best Personal Loans for Fair Credit
• Best Personal Loans for Bad Credit
• Best Same-Day Personal Loans
• Best Banks for Personal Loans
• Best Credit Union Loans