Getting a loan can help a borrower build their credit score. But first, they may need a credit score to get that loan in the first place. Fortunately, there are loans available for borrowers with no credit — and plenty of ways those borrowers can improve their approval chances for the funds they need. This article will explore how borrowers can boost approval odds for personal loans with no credit.
1. Look for lenders with less strict credit score requirements
Credit score is one of the main approval factors at lenders that check credit. Fortunately, some types of lenders offer less strict credit score requirements. They’ll consider factors in addition to credit score during the approval decision process, like income, employment history, and current debts. As a result, borrowers with no credit can get loans from these lenders.
Lenders with more lenient credit requirements may request the applicant to provide proof of income and employment with documents such as:
- Bank statements
- Pay stubs
- Tax returns
- Employment verification letter
Getting approved should be quick and easy, as long as the applicant has steady income and employment.
2. Get a cosigner
A cosigner is someone who signs their name on the loan with the borrower, agreeing to take on the loan responsibility if the borrower can’t. A borrower with no credit may be able to get a loan that requires a credit check if their cosigner has a strong credit score. In many cases, borrowers may look to their parents, spouse, or trusted friend as a cosigner.
3. Shop around with multiple lenders for prequalifications
Lenders may differ in their exact requirements for approval. So, applicants should shop around with multiple lenders to get prequalification offers if possible. Prequalification is when the lender gives the approximate applicant terms they’re likely to qualify for. A prequalification is not a guarantee — the borrower must still apply and get approved — but they indicate a high approval likelihood and let the borrower see what terms they might receive.
4. Get a secured loan
Secured loans require the borrower to put down an item as collateral. The borrower can seize the collateral to repay their debt if the borrower defaults on the debt. This reduces the lender’s risk. So, the lender may be more lenient in approving the borrower for a loan.
Get a loan with no credit
Everyone starts with no credit. Fortunately, there are several ways to get a loan without having a credit score. One of the easiest options is looking for lenders that don’t have strict credit requirements. Borrowers can also consider finding a cosigner, like a parent or a spouse, to help maximize their approval odds.
Borrowers should also consider secured loans, as these can be easier to get, and shop around for prequalification offers before applying. Following these tips will help borrowers secure the funds they need, even with no credit.