How to Get a Loan With No Credit History
There are plenty of loans available for people with a high credit history. Even those with a poor history still have loan options and plenty of advice on how to build a good credit history. But what happens if you have no credit history at all and yet you need a loan?
That is the dilemma facing most young people who have avoided debt for years and hence have no good or bad credit history to their names. The good news is that all is not lost since you can still get a loan even if you don’t have a credit history.
You will just need to research and identify a suitable lender. More important is the fact that once you secure your first loan without a credit history, you will start building your history. Check out the options discussed below.
Apply From a Credit Union
Credit Unions are similar to other traditional banks in terms of services they offer. The only difference between the two is that credit unions are owned by members who have something in common such as employer, religion or geographical location.
Credit unions are more accepting than the formal lending institutions and will listen to you even if you don’t have a credit history. Most credit unions are nonprofit-making institutions since they pass their earnings to their members. Most of them have excellent customer service and lower borrowing costs.
Get a Secured Loan
A secured loan is usually borrowed against an asset that you own. The asset can be a home, car, or land. In a secured loan, the lender isn’t interested in your credit score since the ownership of the asset is temporarily transferred to the lender until the time you will clear repaying the loan amount plus all accrued interest.
The primary advantage of secured loans is that they offer loans with a lower interest rate and better terms. You can also borrow large sums of money depending on the value of your asset. Your home is usually regarded as the best piece of collateral due to its value. If you default in paying the loan, the lender has a right to sell your assets to recover his/her money.
If you lack a credit history but own a car, then you can quickly get a title loan. Title loans usually require you to surrender your vehicle’s title to the lender in exchange for an amount equivalent to the appraised value of the car.
However, the car title must be in your name for you to be eligible for such loans. Typically, you will be required to repay a title loan within 30 days, but if you are unable, you talk to the lender to give you more time.
Online Personal Loans
Technology has moved in to fill the gap that existed for people with no credit history who wanted to access emergency loans. Online personal loans are also great for individuals with low credit scores. Most of these lenders work online and provide competitive loans.
The primary advantage of online personal loans is that they work fast. The decisions are highly automated, and the approved loan will be credited to your account within few hours or a day. The application process is also simple and easy to fill out.