How to Get a Loan Approved with No Credit

how get loan no credit

Attempting to obtain a loan if you have bad credit or no credit at all can be difficult. If you have ever experienced the frustration of being turned down by one lender after another, you may feel like yours is a hopeless situation.

But, you might be surprised at just how many options are available for people just like yourself.

According to a study published by Forbes last year, 40% of the respondents that had applied for credit during the prior year faced real or perceived difficulties in obtaining it. 

With the overwhelming number of applicants who struggle with personal credit issues, more and more lenders have begun creating alternatives for those with less-than-ideal credit.

Read on to learn how to get a loan with no credit or a less-than-perfect credit score!

How to Get a Loan With No Credit (Or Even Poor Credit!)

You may think that your credit score defines your ability to obtain credit. If you haven't established credit, or even if your credit is not so great, you may have encountered some challenges.

But, there are plenty of loan possibilities available to people just like you.

If you have found yourself facing credit issues, here are a few alternative options that you might want to check out.

1. Credit Unions

Credit unions are often a great option for people who cannot get a loan through a financial institution.

With credit unions, the allowable maximum interest rate is 18%, which is much better than many of the other loan options from bad or no-credit lenders.

2. Bad or No-Credit Online Loans

There is a wide range of lenders that offer online loans specifically for bad or no-credit consumers.

Bonsai Finance is one such resource that offers a variety of online loans from hundreds of different lenders.

Their options include payday advance loans, same-day loans, and loans with no credit check or collateral. Best of all, the loan application can be completed online and funds are deposited directly into your bank account for a seamless, simple process from start to finish.

You can also find many additional loan options online, including those offered by peer to peer lenders, as well as many of the types of loans that are listed below.

3. Apply for a Loan With a Co-Signer

Do you have a family member or friend with a good credit history that would be willing to co-sign on a loan with you?

A co-signed loan is an easy solution to get the funds you need without jumping through hoops to get them. Also, you can often get a much better interest rate than if you were to seek approval on your own without a desirable credit score.

Many major financial institutions, including banks such as Wells Fargo, allow you to apply for a personal loan, car loan, or even a home loan using a co-signer with a verifiable good credit rating. Wells Fargo's loan amounts vary but can be for as much as $100,000 dollars with interest rates starting as low as 7.24%.

Other lenders who allow a co-signer, such as Backed, offer loans for up to $25,000 dollars with interest rates beginning at just 2.9%.

Loans with a co-signer often favor traditional terms and can help to build your credit.

4. Loans Using a Form of Collateral

Another sure way to get the funds you need is to offer a form of collateral to use as backing for your loan.

Lenders will often allow you to list property that you own, such as a home, car, or CD, to ensure the loan's payment agreement is fulfilled.

However, you should be aware that if you default on these type of loans, the lender can assume ownership of the property you have listed as collateral.

5. Loans With a Substantial Down Payment

Perhaps you have enough cash to supply a hefty down payment, but need additional funds to meet your financial needs. If you are willing to put down a significant percentage of the amount you are applying for, many lenders will loan you the remaining funds.

This option is often utilized by first-time home buyers or home buyers who have a spotty credit history.

If you choose to go this route, you should be prepared to fork over 10 to 20% of the loan amount up front to use as your down payment. And, the loan may have terms that are stricter than those given to customers with stellar credit scores.

You might have a higher interest rate or severe penalties for late or missed payments. If you default on your loan, you risk losing your down payment plus any additional payments that you have made towards the balance of the loan.

Since loan applicants who have invested a large down payment are less likely to default, lenders are more likely to provide funds to those without an established credit history.

6. Apply for a No-Credit/ Bad-Credit Credit Card

A credit card works much like a typical loan. You are given a line of credit that you can use now, and make payments that include interest fees over time.

There are many credit cards available to applicants with no credit and poor credit.

But, the credit cards available to these customers tend to have higher interest rates and may require a deposit or automatic monthly payments to be drafted from your bank account. You might also have daily limits that only allow you to access a limited amount of funds per day.

How to Increase Your Future Lending Opportunities

Now that you know how to get a loan with no credit, it is important that you stick to any terms as outlined in your loan agreements. This will help you broaden your funding possibilities in the future.

By establishing a record of on-time payments and maintaining a low debt-to-income ratio, your credit rating will improve and you can seek loans with more desirable terms.

Looking to boost your credit score as well for future finances?

Check out these tips for smarter spending for personal installment loans that will help you to keep your budget in check!

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