Can I Get a Personal Loan If I Don’t Have a Credit Score?

Personal loans can be used for a variety of big or unexpected expenses, often at a lower cost than alternative consumer options, like credit cards. Whether you need a personal loan to fix your car, cover sudden medical bills, or pay for a home renovation project, a personal loan product can give you access to the funds you need with the flexibility to pay it back over time. 

Many lenders will review your credit score when you apply for a personal loan, which helps them determine whether or not to approve the new debt. With that said, it is still possible to get a personal loan without a credit score — your options just might be a bit more limited.

Here’s a look at how to get a personal loan if you don’t have credit, and what to expect along the way.

Why Your Credit Score Matters Anyway

A credit score is a numerical representation of an individual's creditworthiness, or how they manage their credit-based accounts such as loans, credit cards and other revolving accounts. This three-digit number can be generated using a number of different scoring models, such as FICO and VantageScore. It is then used by lenders to determine how much risk a borrower would likely pose — meaning, how likely the borrower is to repay their debt in full and as promised — were the lender to approve them for a loan or line of credit.

This score is calculated by looking at various consumer factors, like whether or not you’ve made any previous payments late, how much debt you carry at any given time, and how long you’ve been managing your credit-based accounts. A high credit score indicates that a person is a low-risk borrower, while a low credit score suggests the opposite. 

Bad Credit vs No Credit

Of course, there is a difference between having a bad credit score and simply having no (or limited) credit history.

A poor credit score shows that you haven’t responsibly managed the accounts you’ve had in the past. That could mean:

• Carrying too high of a balance, relative to your overall credit limit

• Opening too many new accounts in a short period of time

• Applying for a lot of new credit

• Making payments late

• Defaulting on a balance altogether

If you were extended credit in the past but managed it in a way that resulted in a bad credit score, this could seriously limit your ability to get a personal loan with good terms now.

In a lender’s eyes, though, a bad credit history is different than simply having no credit history. If you just haven’t opened any credit cards, loans, or other credit-based accounts in your name previously, a lender may still be willing to approve you for a personal loan… even if you don’t have a credit score.

How to Get a Personal Loan Without Credit

When applying for a personal loan with no credit score, your options may be a bit more limited than if you were a high-score borrower. However, there are still many lenders and options to consider.

1. Look into secured personal loans. Most personal loans are unsecured, which means that they aren’t tied to or backed by any of your assets, called collateral. This presents more risk for the lender, who has nothing tangible to seize if you don’t wind up repaying your loan as promised. Secured personal loans, however, are loans that are backed by collateral such as a car or savings account. These loans are less risky for lenders to issue because they have something to fall back on if the borrower defaults on the loan, so you may have better luck getting approved with no credit.

2. Consider adding a cosigner. A cosigner is someone who agrees to be responsible for the loan if you are unable to repay it. This can be a family member or friend with a good credit score, who is willing to be added to your loan when you apply.

3. Apply through a credit union or bank you already use. Credit unions are nonprofit financial institutions that are owned and controlled by their members. Because of this, they often have more flexible lending criteria and may be more willing to work with people who have no credit history. If you already have a relationship with a bank or credit union — such as maintaining a checking or savings account there — they may also be more willing to lend to you.

4. Search for no credit check loans. There are some online lenders that offer personal loans with no credit check. These loans typically come with higher interest rates and may include other fees, but they can be a last resort to consider if you’re turned down elsewhere.

It is important to note that these options may come with some downsides, such as higher interest rates and added fees. It is also important to carefully review the terms and conditions of any loan before signing your loan agreement, to ensure that you fully understand exactly what the loan entails.

Alternatives to Personal Loans for No Credit Borrowers

If you aren’t able to get the loan you need or can’t find the right terms as a no-credit borrower, there are a few other alternatives to consider. These might not be the best long-term solutions, but can get you by in a pinch if you need cash fast, such as in an emergency situation. 

• Apply for a credit card. Credit cards can give you access to on-demand funds when you need them. If you have no credit, you probably don’t yet have a credit card either. However, you may be able to get approved for a lower credit limit if you apply, which would allow you to charge funds quickly. If you have a trusted family member who would be willing to add you as an authorized user on their own card, this can not only give you an emergency financial safety net but also help you build your own credit along the way.

• Boost your score with a credit builder product. If you don’t have enough of a credit history to qualify for the personal loan you want today, utilizing a credit builder product can help you boost your score both in the short and long term. Some of these products can pull from non-traditional payment sources — such as utility bills and even rent payments — to demonstrate a positive payment history. This can help show your creditworthiness to lenders and begin building your credit score in a shorter period of time. Other credit builder programs use a personal loan to begin building your payment history, and can even give you access to cash right away.

Bottom Line

Even without a credit score (or with very limited credit) it is possible to get a personal loan, which you can then use for a variety of purposes. However, getting this loan may require more effort and research than if you had good or excellent credit. 

Be sure to weigh the pros and cons of each option and choose the one that best meets your needs! Then, work to build up a healthy credit score so that the next time you need a personal loan, you have even more great options from which to choose.