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How To Take Out a Loan with No Credit

When you are in a bind and need money fast, you do not have many options when borrowing a large amount of cash. That is why so many people turn to no-credit loans for instant access to considerable sums of money. 

Many companies offer no-credit loans to people without a good credit history. You can find many of these offers through online lenders, which will require personal information and proof of employment.

So, how do you take out a loan without credit, and is it a good option? In this article, you will discover the meaning of a no-credit loan, the process of obtaining one, and the pros and cons associated with its usage.

What Is Credit?

Credit is that pesky score that follows you around your whole life, determining whether or not you are financially responsible. A good credit score will help you buy a car or house or make large home improvements and not have to pay a fortune in interest when paying that money back.

When you pay your bills on time, keep your credit card balances low, and maintain large accounts responsibility, your credit score will stay in good standing.

However, If you have no credit, your credit score is low due to missed payments, or you have too much debt, your credit will be poor. Loans will be nearly impossible to get. 

What Is No Credit?

Unlike bad credit, no credit doesn’t show false or negative information; it just indicates a lack of credit usage and history. If little credit is used, the bureaus do not have enough factors to indicate a credit score.

Not having credit is common for younger people trying to get credit cards and loans. It can also be a problem for those who have recently immigrated to the States and haven’t had time to build credit. Or it can result from those without interest in owning or using credit cards.

Credit cards play a big role in your credit score because creditors like to see rotating purchases and on-time payments. 

Is No Credit the Same as Bad Credit?

No, credit and bad credit are not at all viewed as the same thing. Unfortunately, it can be just as difficult for some people to get loans or credit cards with no credit as for those with bad credit.

Can You Get a Loan Without Any Credit?

Although it can be a little tricky, a person with no credit can get loans. These are usually small personal loans that will be used to pay off emergency debt or purchase a last-minute much-needed item.

Simple, fast, online loans are one of the best ways to obtain an installment loan when you need money fast. There are many reasons people jump online to find the best rates and loans out there that can approve loans within minutes and release funds within a day or two.

These types of loans are usually between $200-$3,000 and can be used towards things such as medical bills or procedures, broken appliances, car repairs, vet bills, etc.

Obtaining a loan is often based on a credit score; however, some lenders will look at other factors, including your employment history, state laws, bank statements, or tax returns.

Aside from applying for small loans online, you can also apply for them through a credit union or bank.

Credit Unions and Banks

You can attempt to get a loan through a credit union or a bank; however, if you clear the no-credit factor, your interest rates will be insanely high. If you decide to take on one of these loans, your best bet would be to go with a credit union over a bank if the option is available.

Credit unions are non-profit companies, whereas banks are for-profit, private-owned companies. Credit unions’ fees and rates are much lower and more affordable than large banking chains. Credit union members are also provided with much more opportunities and personalization than bank members.

A woman looking over loan options.

Alternatives loans for Those with No Credit

If you are struggling to get approved for a loan, you should strive to build your credit so that you can eventually get approved for a loan with decent and affordable interest rates. If you are stuck and need money and cannot wait or get a loan, there are other ways to attempt to get the money you need.


If you can find someone you trust and has good credit, they can go to a bank or credit union with you and co-sign a loan. This statement says that if you default on the loan, the co-signer would be liable for the lost money. In short, the co-signer vouches for you and takes the fall if you do not repay the loan. 

Non-Profit Help

You can look to non-profit organizations for help depending on why you need the money. This is usually for things such as medical bills, utility payments, or even student loans. You can find places online that offer these services and then apply for them separately. 

Friend or Family Help

If all else fails, you can always look towards friends and family in their time of need. Although this should be considered a last resort, sometimes, these situations do arise. Although it may seem silly at the time, you should always put the terms and conditions in writing, with both of you signing the agreement.

Borrowing money from people you care about can cause some serious issues if the terms are blurred or confused.

How Do You Build Credit?

If you are struggling to get loans or even an apartment due to no credit, there are a few different ways that can help you start building up good credit.

Prepaid or “Secured” Credit Cards

A prepaid secured credit card is a card that you fund from your bank account. You are not given a line of credit; however, the reports sent to credit bureaus act as such. If you are out and need to use your card but do not have enough money funded to the account, the issuer can pull the money straight from your bank, crediting you the amount with no issues.

There are fees associated with using these cards, but using them a few times a month can help build credit. Not all secured credit cards report to credit bureaus, so make sure the one you choose will.

Small Store Card Offers

Many big store chains, like Walmart, Home Depot, etc., will offer minimal credit lines to potential customers. Online stores like Amazon or PayPal Credit offer these as well. Utilizing these offers is a great way to build credit for yourself. Purchase small items frequently and pay for the statement as soon as it arrives.

Be an Authorized User on Someone Else’s Account

If you have someone you trust, and they trust you and have a good standing line of credit, ask them to make you an authorized user on the account. You will have access to their accounts, and as long as they keep them in good standing, this will benefit your credit score.

Student Credit Cards

Student credit cards are secured credit cards that are specifically designed to help students get an easy start at credit building. These credit cards usually start out with a pretty low credit line and can increase over time with on-time payments and good spending habits.

These cards are great for building credit for those who have none and offer rewards and can provide special benefits to students who use them.

Pros and Cons of No Credit Loans

If you apply for a line of credit with no credit and get approved, it doesn’t mean it is a good option, and you should do it. There are a lot of pros and cons to think through before making any final decisions.

Pros of No-Credit Loans

No credit loans can be useful in some situations. Here are some of the most frequently listed benefits of no-credit or bad credit loans.

Funds When You Need Them

These loans are very useful when you are in a bind and need quick access to money and no other options are left.

Fast Money

Most of the loans available are payday or next-day loans, which can get funds to you by the next business day.

Builds Your Credit

If you are approved for a small no-credit loan, paying them back in time and keeping them in good standing will help quickly establish a good credit history.

Longer repayment options

Installment loans are the most common forms of personal loans, giving you a select amount of time to repay that can extend for years.

Cons of No-Credit Loans

No credit loans may give you quick access to cash but may be more trouble than they are actually worth. Here is a list of cons relating to no-credit loans.

High-Interest Rates

No-interest loans usually come with extremely high-interest rates, meaning you could pay up to twice as much as you borrowed by the time you paid off the loan.

Massive Fees

There is a huge slew of fees associated with no-credit loans. You will see the same fees you might see on other options; however, these fees are going to be higher and much harder to steer clear of.

Collateral Requirements

There are many types of no-credit loans that require some sort of collateral to ensure repayment good repayment the money is paid back. Usually, the collateral is a car title or something similar. 

Automatic Withdrawals

Most of the time, no-credit loans will require the responsible party to set up an automatic payment with the bank ensuring the money comes out at the same time each month. This can be very problematic if you do not have the funds when they take the money out, including more fines and fees.

Over Borrowing

Sometimes these loans can be used by people who don’t necessarily need the items they are purchasing, putting them into further debt and creating financial problems beyond not having credit.

Low Limits

Sometimes these loans are not even worth it. The limits are usually very low, and as mentioned above, the interest rates are so high that it’s not worth borrowing.

Pros of No-Credit Loans Cons of No-Credit Loans
  • Available funds when you have no money.
  • Very high-interest rates.
  • Fast money.
  • Tons of accumulating fees.
  • Helps build credit.
  • Collateral requirement.
  • Longer time is given for repayment
  • Automatic withdrawals.
  • Borrowing money you may not be able to pay back.
  • Low limited amount.

Unless it is an absolute emergency, finding another way to get a loan is usually best until you have established a good credit score.

How Do You Monitor Your Credit Score?

Monitoring your credit score is one of the best things you can do to improve and build your credit history.

There are many ways to keep track of your credit and opportunities to determine where you need to improve. Keeping an eye on your credit score, usage, and information is helpful when building credit and ensuring everything is accurate and that no one has stolen your identity or interfered with your credit and personal information.


There are a few ways for someone with no credit to obtain a no-credit loan, but does that mean it is right for you? It is important to take a close look at your situation to determine if all of the disadvantages of these loans are worth it.

In some cases, they are. In other cases, it is better to try and find alternative options while you are working on building your credit.

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