How to get a personal loan with no credit history

If you’re applying for a personal loan for the first time and you have no credit history, learn more about your lending options to get the funds you need. (iStock)

The more established your credit history and the higher your credit score, the easier it is to qualify for a personal loan. But it’s still possible to get a personal loan even if you don’t have a credit history.

Here’s how to get a personal loan with no credit history, as well as some things you can do to build your credit.

Even if you’re just starting out on your credit-building journey, Credible makes it easy to see your prequalified personal loan rates.

• How to get a personal loan with no credit history
• 4 of the best lenders that offer no-credit loans
• How can you have no credit history?
• Pros and cons of no-credit-check loans
• Is no credit worse than having bad credit?
• Ways to establish credit if you have no credit history

How to get a personal loan with no credit history

When you apply for a personal loan, most lenders run a credit check to see how likely you are to repay the loan. If you don’t have a credit history yet (it takes credit to build a credit history after all), you can apply for a personal loan with lenders that don’t require a credit check.

When you apply for this type of personal loan, you’ll complete an application and will include information about your identity and income, such as:

• Valid government-issued photo identification
• Proof of income, such as recent tax returns or pay stubs
• Education history
• Employment history
• Contact information for employer
• Recent bank statements
• Personal or professional references

4 of the best lenders that offer no-credit loans

If you want to take out a personal loan and have no credit history, these four Credible partner lenders don’t require high credit scores:

Avant

Avant offers personal loans ranging from $2,000 to $35,000. 

While most Avant customers have a credit score between 600 and 700, the company also offers secured personal loans and tailors its loan underwriting process to each applicant’s unique credit situation and history. 

• Minimum credit score: 550
• Repayment terms: 2 to 5 years
• Fees: Administration fee of up to 4.75% of the loan amount; origination fee of 0% to 8%

LendingPoint

LendingPoint offers personal loans ranging from $2,000 to $36,500.

The lender specializes in working with borrowers with lower credit scores and says it has a "proprietary smart technology" that assesses an applicant’s credit based on more than just a credit score. 

• Minimum credit score: 580
• Repayment terms: 2 to 4 years
• Fees: Origination fee from 0% to 7% may apply, depending on your state of residence

OneMain Financial

OneMain Financial offers personal loans ranging from $1,500 to $20,000. 

The company doesn’t have a minimum credit score for personal loan borrowers and specializes in working with people with little or no credit history.

• Minimum credit score: None
• Repayment terms: 2 to 5 years
• Fees: Origination fees may be a flat amount ranging from $25 to $400, or a percentage of your loan amount ranging from 1% to 10%, depending on the state where you open your loan

Upstart

Upstart offers personal loans ranging from $1,000 to $50,000.

Unlike many other lenders, the company explicitly states that it works with borrowers with no credit history.

• Minimum credit score: 580
• Repayment terms: 3 to 5 years
• Fees: Origination fee of 0% to 8% of the loan amount; late fee of $15 or 5% of the past due balance, whichever is greater; and $15 ACH return or check refund fee

With Credible, you can quickly and easily compare personal loan rates from various lenders — and it won’t affect your credit score.

Methodology

Credible evaluated the best personal loan lenders based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms and fees. Credible’s team of experts gathered information from each lender’s website, customer service department, and via email support. Each data point was verified to make sure it was up to date.

How can you have no credit history? 

We aren’t born with credit histories. Once you open your first credit account it can take three to six months of activity with that account to generate a credit score and to kickstart your credit history. 

Pros and cons of no-credit-check loans

Like any financial product, loans tailored for borrowers with no credit histories come with pros and cons to consider.

Pros

• No credit check required — When a lender doesn’t require a credit check, it’ll take other factors into account, such as your employment history and debt-to-income ratio, which can make it easier to qualify for credit.
• Can help you build credit — You need to take out credit to build your credit history and qualify for better credit products. Taking out a personal loan, even one for a small amount, can help you build your credit history.

Cons

• High interest rates and fees — Lenders take on more risk when they lend money to someone who doesn’t have a credit history, as they don’t know how likely these borrowers are to repay the loan. They charge high interest rates and fees to make up for that risk.
• Can be hard to repay — Loans with high interest rates can be challenging to pay back on time, which can damage your credit score.

Is no credit worse than having bad credit?

Having no credit history leaves a lender wondering whether you’re a reliable borrower, but having a bad credit score signals to them that you do struggle to manage your credit. It can be hard to find a personal loan at good rates if you have no credit history or a bad credit score, but lenders typically see having no credit history as more of a blank slate. 

Ways to establish credit if you have no credit history

If you don’t have a credit history established yet, you can start to build your credit history by applying for credit products designed to help new borrowers out. Secured credit cards and credit-builder loans are easier to qualify for and give you a chance to establish a credit history and build your credit score. 

You can also ask a trusted family member, such as a parent, to add you as an authorized user on their credit card. That way, when they make payments on time each month to their credit card company you get a credit boost. (Though if they miss payments you risk damaging your credit.) Once you establish a positive credit history, it should get easier to qualify for traditional lending products. 

Be careful when applying for some no-credit-check lending products, like payday loans. These loans come with sky-high rates and fees, which can make them hard to repay. You should only consider these loans as a last resort. 

If you’ve spent some time establishing your credit and are ready to apply for a personal loan, visit Credible to see your prequalified personal loan rates in minutes.