How to apply for a loan with no credit? Well, many people ask about this thing because most of the lenders will run some checks, especially on your credit history? But how would it be if you do not have a credit history at all? In that case, you can try these 3 ways to get a loan with no credit score.
3 Ways on How to Apply for Loan with No Credit
1.Appeal to family and friends
Co-sign for a loan
The easiest yet most traditional way to apply for a loan without a credit score is getting into someone’s piggyback with a good credit score. Co-signing a loan with a friend or a family member could save your back and solve your problem. But you should be responsible to pay the credit in time.
It is better if the co-signer is a direct relative. Other than that, the co-signer should understand the risks before signing on paper. A co-signer who has a high credit score will make your chance to get loan approval higher as well.
Get a personal loan from family or friends
Instead of applying for a loan to the bank or other formal providers, you may ask your family or friends who are financially capable. Direct yet personal loan from a close relative or friend will be much better because they know you better than anyone else. But you have to treat the personal loan as serious as if you apply for a loan to other institutions. You and the direct lender may create documents and agreement in the first place.
2. Take a look at the alternative lenders
Find information in case the employer has a relationship with the financial institution
If you work in the company, you can find out if the employers have a relationship with the financial institution since some companies were established that way. But, you may put your salary on the table to act as the collateral when you want to apply for a loan at this institution.
This term is common in large companies. So, you may find a very limited option and resource if you work in smaller ones. The financial institution could be a credit union or a bank or something totally different from those two.
If you want to go through them, there will be two possible way. The first one and the most common method, the terms of the loan will be set by you along with the financial institution. The monthly payment will be directly deducted from the paycheck of yours.
The second method, the loan terms will be set by you and the financial provider. The monthly payment will be paid as you would if you have the collateral to secure the loan if you do not ask your employer. But, if you fail to pay the monthly payment in the due date, you will be cut off for the payment along with the additional interest. This is one of the ways on how to apply for loan with no credit.
Applying to a credit union
A credit union might still require you to make a proof about your responsibility in your financial status at some level. But in general speaking, the credit unions are accepting more than other formal financial institutions like banks. So, you should try it first.
The members are essentially the owner of a credit union. The members mostly have something in common like a geographic location, employers, religion, or maybe an industry. The institution is the nonprofit organization which makes the earning of the credit union will be given back to the members in a certain form like VIP service or lower fees.
You can find about the credit unions in your area on the internet. Some of them have websites or you can go to the credit union locator you can find through the search engine. Before you decide to apply for a loan, you may compare the terms and the loans from several of them. The lowest interest rates with the best conditions for payments should be your choice.
There are so many programs exist to allow you to get the personal loan from another person directly instead of applying to an institutional organization. The drawback is that you may find it difficult to get an approval of peer-to-peer loan if there is no proof about your responsibility toward your money. However, you should prepare things to plead for the alternative.
This type of loan will be done through the online platform with a streamlined process. Just make sure that the website is reliable. The borrowers could sign up and post a listing of a loan. The listing will be checked by the investor and they will determine if you meet their criteria or vice versa. The lender will definitely check your credit and since you do not have a credit score then it will be noted on the listing. When it comes to apply for loan with no credit, a peer-to-peer loan is worth a try.
3.Demonstrate financial responsibility
After several months to a year of your responsibility to manage the payoff, you already have a financial record now. But the credit score or official credit is not out yet. If you can call the creditors to ask for verification of the official financial record, you are really that close to making a proof about the financial responsibility to other potential lenders.
An impressive down payment you can make will improve the chance of you to secure the loan even though you do not use the credit. For instance, the amount of money that is needed to be approved is lower. The institution or lender will take the risk on you later, which give you better chance to get the approval.
The next step is gathering the documents. Those will be used to prove that you are responsible to make the payment and willing to make a payment as well. You may need a statement from employer. And later, you already create your credit history, which will ease the process if you want to apply for a loan later without having to worry about how to apply for loan with no credit.