Disclosure: Stilt is a lending company. Nonetheless, we are committed to recommending the best loan products to our readers when their needs are outside Stilt’s loan offerings.
Do you need to make some big purchases soon? Are you looking for ways to finance a personal project? Or are you perhaps renovating a space in your home? It’s exciting to plan expansion and renewal, but the execution of your plans could lack if you don’t have enough cash to finance it. And even worse, it’s quite hard to get loans with no credit history.
Did you know you can get a loan with no credit history? Even if you have no credit at all, you could still be eligible for a loan. After you’ve read this, you’ll know how to apply for loans with no credit history. This is how it works.
Why Some People have “No Credit”
Why do some people not have credit? You’ll be surprised to know how hard it can be for some people to qualify for credit.
Immigrants typically struggle to get help from traditional banks and lenders. They lived their lives abroad in a different economy. They don’t have any credit history in the U.S. and once they come here they aren’t able to bring it along.
U.S. credit bureaus don’t accept credit histories from abroad. Any immigrant will have to start a new credit history once they move to the U.S. They can do this with something like an immigrant personal loan.
Some people may also never have qualified for the credit in the first place. Perhaps they came from a background that couldn’t grant them eligibility for credit. But there is hope. These people could possibly still be eligible for a loan with no credit history.
Why Not Having a Credit History Might Be Good for You
A life without credit is actually not that bad. Think about it. You don’t have any debt. You don’t have a lender breathing down your neck about your monthly installments. Rather than repaying interest you can invest those would be expenses and earn interest. Living within your means and managing without any credit helps to reduce the stress induced by looming debt repayments.
You also can’t get bad credit if you don’t have any credit at all. That’s probably the best advantage of life without credit. People with no credit histories don’t have bad credit. It may still be possible for you to get bad credit loans if you do find yourself in this situation, however.
People without any credit at all can start off in the right way. But what is credit and why is it so important?
What is Credit History and Why is it Important?
Credit history is a track record of financial dealings relating to debt. Large institutions called credit bureaus to gather and store this information. They keep digital financial histories about every traceable individual (including many businesses as well) in the U.S. economy. This information keeps a specific focus on credit transactions.
Lenders and other financial services providers track en judge their customers’ credit records to determine their eligibility for credit and other related services. People who don’t have credit histories are automatically excluded from certain types of credit or other related financial services.
Unfortunately, the lack of credit history might refuse you the eligibility for credit required to grab hold of an important opportunity. You need to walk this tightrope of credit with a healthy balance. Use the credit to build a healthy history. But don’t become over-indebted and lose your financial wealth in the process. What can you do when you want to start a credit history? How could you still get credit to build your credit history, if you don’t yet have a credit history?
Options for People Without Credit Histories
There are many ways to get a loan with no credit history. Student loans with no credit can help people pay for tuition fees. It’s especially useful if you want credit to get started building your credit history. Here are some ways to get credit without a history.
Get a Loan with a Cosigner
People without credit histories struggle to qualify for loans. They don’t meet the minimum credit score requirement as determined by lenders and lose eligibility. But they can still get a loan if the lenders allow a cosigner and they manage to get cosigners.
A cosigner offers their credit history and creditworthiness as security for the beneficiary of a loan. The cosigner can meet the minimum requirements and basically qualify for the loan on behalf of the beneficiary. But this also means the cosigner is jointly responsible for the loan. The cosigner must repay the loan if the beneficiary fails to do so.
A cosigned loan is a great loan with no credit history option if you can find someone who is willing to be your guarantor.
Borrow from Lenders Who Specialize in No Credit Loans
Alternative types of lenders like online lenders offer loans to people who don’t yet have credit. These businesses are geared to serve people with poor credit. They understand your needs better and are willing to offer you the credit you need even if you don’t have a history yet.
It’s important to find reputable lenders who are willing to do this. Don’t fall for any scammers trying to gain your personal details. Make sure the lenders you apply at are legitimate financial institutions.
Also, remember to use the loan wisely. You don’t have a credit record yet. Whatever you do now has a massive effect on your credit history. Pay on time and settle your debt as expected by your lender to build a positive credit history. A good credit history helps to improve your eligibility for future credit applications.
Save for the Purchase Instead
This is the smartest way to approach a purchase. Live within your means and buy what you need, not what you want. Save up enough cash before you make a large purchase. You don’t need to take out credit for luxury items.
It’s a different ball game when you need to replace an emergency item like a thermostat or a car (needed to get you to and from work). But whenever you can wait, rather save up enough cash before you buy it. You don’t want the burden of debt repayments for something you didn’t really need.
Ways to Start Building Your Credit
It’s much easier to build credit than you would think. Here are some methods to start building a credit history. Soon your options won’t only be a loan with no credit history.
Become an Authorized User
You can become an authorized user on someone else’s credit card. An authorized user also gets the same credit history recorded as the principal user. Spouses often become authorized users on each other’s credit cards, but you could possibly ask for the same on a friend or family member’s card.
Only ask to become an authorized user with someone you trust. Remember, their financial habits will reflect on your credit history. If they tend to overspend it will seem like your own habits. You don’t want to damage your credit history due to someone else’s lack of financial diligence.
Take Out a Credit Builder Loan
It may sound like a loan but it’s like a savings account. A credit builder loan helps to build your credit. You pay a predetermined monthly installment for a set period and once it’s completed the company repays you the amount you “borrowed”. In the meantime, the company reports your payments as credit repayments. This helps to build your credit history without the eligibility requirements for a loan.
Apply for a Secured Credit Card
A secured credit card works just like a normal credit card. It has a maximum limit and required monthly payments based on the amount you use. But you need to pay a deposit equal to the maximum limit on the card. That deposit serves as collateral. The lender doesn’t need to check your credit history because they have no risk offering you this service. Use the card like a normal credit card and repay on time to build a good credit history.
Credit Products to Avoid
All credit won’t benefit your credit history, much less your financial wellbeing. Some lenders offer options at ridiculous interest rates and others have questionable business practices.
Here some types of credit products you need to avoid:
There’s no use in getting a credit-building loan if the lender does not report your payments to the credit bureaus. Some lenders are not interested in your ability to repay a loan. They just want to lock you in on an expensive loan agreement and milk your interest repayments (no matter how long you take to settle the debt).
Some legitimate lenders won’t require a credit check
Credit is not the most important thing in the world. If you can, try to manage without taking out any debt. But having a good credit history is extremely beneficial when you do need it. It helps to lower your offered interest rates, cheapen monthly debt repayments, and possibly reduce the time it takes to settle your debt.
If you don’t have a credit history yet you can always look for suitable credit offers. A loan with no credit history can help you build a good credit history and possibly help finance that project of yours. Find reputable lenders and go apply today. for a loan application, but they’ll still check your personal details and find some way to verify your ability to repay the loan you applied for. Only accept credit offers that will (in some way) benefit your financial wellbeing.
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