There’s a lot to consider when you’re shopping for a first-time loan – especially when you’re looking for a loan with no credit. Unexpected bills, home repairs, paying down debt, major purchases – everyone needs a little extra cash sometimes. Those unexpected expenses don’t care whether you have great credit, low credit, or no credit. So, what are your options for getting a first-time personal loan with no credit?
Shopping for a loan with no credit can be complicatedWhen you boil it down, credit is a rating based on how well someone manages their finances and debt. There are several factors that go into your credit score, and the resulting number helps lenders determine how likely you are to make on-time payments and repay your debts in the future. Having no credit can complicate things. It keeps creditors from the ability to evaluate your credit risk. Even simple things – like paying with cash instead of using a credit card – can affect future lending options. If it doesn’t help you build a credit rating or give you a chance to show that you can use credit responsibly, it doesn’t help you build a credit rating.
You might have no credit if:
- You’ve never applied for a credit card. If you’ve never had a credit card or taken out a loan, you’re missing out on an opportunity to build a credit history.
- Your account doesn’t show recent activity. Lenders like to see that borrowers are using their credit regularly and responsibly. This demonstrates that a borrower is likely to repay their personal debts according to the terms of their loan.
- Your accounts are too new to be scored. It can take several months for a new account to be integrated into your credit score. If a lender pulls your credit report, it may not reflect your full financial picture if you’ve recently opened new credit accounts.