What if "no credit" didn't mean "no loans?"
Plenty of us need a little financial help from time to time. However, bad credit can keep us from getting the money when we really need it.
Fortunately, getting a loan with no credit is easier than you think. Keep reading to discover our handy guide!
What Is Bad Credit?
It's easy to think that you have "no credit." The truth is that everyone has a credit score, and "no credit" is just another way of saying "bad credit."
In order to understand your score, you need to understand what bad credit means. Fortunately, it's very easy to understand.
Generally speaking, a credit score below 579 or so is considered bad. And anything above 700 is considered good. A score of 850 is as high as the credit rating goes.
If you are reading this, you likely have a score below 579. The good news is that you can still get a loan. However, you need to understand the consequences of bad credit.
Consequences of Bad Credit
It's a misconception that it's impossible to get loans with bad credit. You can get loans, but you are going to be at a disadvantage compared to those with good credit.
The main disadvantage is the interest rate. If you have poor credit, then most loans offered to you will have a high-interest rate.
That high rate affects your monthly payments as well. Even small changes in interest percentages can translate to major differences in how much you pay.
This is why your "Plan A" should be to improve your credit. If you don't currently have an emergency financial need, it's worth it to boost your credit before you take out a loan.
Improving Your Credit
Improving your credit is pretty simple. First, you need to sign up for one of the many free credit monitoring services that are available.
These services offer monthly updates on your credit score. Furthermore, they make recommendations for ways that you can boost your credit.
Such methods may include disputing false charges and reducing your debt-to-income ratio. You may be surprised how empowering it is to see your credit score climbing higher every month!
When you've boosted your credit or just need some quick cash, it's time to take out a loan. Fortunately, there are many ways to take out a loan with no credit.
Payday Loans
One popular option is taking out a payday loan. Why is this option popular? Simple: the lending agency usually doesn't care about your credit.
Instead, they care about whether you have a job. If so, you can typically get a short-term loan for one month. Hence, the name: you are meant to pay the loan back when you get your next paycheck.
Some criticize these loans because they have a high-interest rate. However, they remain the most surefire way to borrow money no matter what your credit score is.
You can even take out these loans online. This helpful page has more info on how to get started!
Personal Loans
Another option is to take out a personal loan. And this is where understanding your credit score will really come in handy.
For example, scores under 579 may be considered "bad" by most places. But there are lenders like SoFi who have no minimum credit requirement!
This all comes down to doing your homework. Instead of taking the first offer you find, you should shop around and understand your options.
If nothing else, knowing what else is available out there will give you some serious negotiating power with any given lender!
Cue the Cosigner
Remember when Captain Kirk beat the "no-win scenario" by changing the rules? It's possible for you to do that with the lending game.
When you apply for a loan, the lender only looks at your credit. If your credit is bad, there is a simple solution: bring someone with good credit with you!
It's possible to get a cosigner for a loan. This cosigner may be a parent, spouse, or simply a friend.
If they have good credit, it boosts your chance of getting the money you need. Just make sure that they understand that they (and their credit) will be held equally responsible if you miss any payments on the loan.
Credit Union Benefits
It's easy to think that all lenders are alike. After all, a bank is a bank...right?
However, credit unions pride themselves on being an alternative to traditional banks. And their focus is on helping the community grow and prosper.
Why is this important for loans? If you have a relationship with a credit union, you may be able to get a loan from them despite having poor credit.
Obviously, building a relationship takes time, and you may not have a lot of time. But it's worth opening a credit union account today so that you have better lending options in the future.
Crowdsourced Loans
There is a final alternative to traditional loans. You can now find crowdsourced loans (also known as "peer-to-peer", or P2P, loans) online.
Instead of going through a bank or credit union, these loans go through individuals. And those individuals are able to set their own credit requirements, interest rates, and so on.
As you might imagine, individuals can be more flexible than major institutions. And with so many peer lenders, it's easy for you to shop around and find a rate and requirements that you agree with.
Obviously, you will want to do all of your homework about the lending platform and the lender. But this is one of the best alternative ways to get the money you need.
Getting a Loan With No Credit: The Bottom Line
Now you know all about getting a loan with no credit. But do you know where you can find out even more about getting loans when you really need them?
We specialize in helping both individuals and businesses get the financing they need exactly when they need it. To see how we can help with your financial needs, check out our lending articles today!
