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Loans for People With No Credit History

by Jason Reeher
  • Overview

    Especially if you are young or have never had credit, getting a loan can be difficult. Building credit takes time, yet you can qualify for a loan without a credit history if you know where and how to look.
  • Basics

    Banks and other financial institutions need to limit risk. Therefore individuals with no credit history may not qualify for single-signer loans, since part of the criteria for a loan is a minimum credit score.
 
  • Significance

    Overcoming a lack of credit history means giving the bank a reason to lend to you. The most significant way to do this is to have a cosigner, or a creditworthy relative who is willing to sign for the loan with you.
  • Effects

    If you can get a cosigner, you will build your credit profile as you pay back the loan. Building a solid repayment history will boost your credit score, which means that the next time you borrow you may be able to do so on your own.
  • Strategies

    If you do not have a willing cosigner, you can consider a secured credit card. Secured cards grant a credit line in exchange for a small cash deposit as collateral. As you use the card and make payments, the bank reports your payment history to the credit bureaus, building a credit score.
  • Considerations

    If you have no credit profile, you have an opportunity. After all, many people are saddled with too much debt and a low credit score as the result of poor financial planning, whereas you have a clean slate. Consider your first attempt at gaining credit as a step toward responsible personal finances.

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