How to Apply for a Personal Loan with No Credit
There are many places to get a personal loan even if you have no credit. Approximately 70.2% of American households have a credit card at this point. Nearly half of American credit cardholders carry a monthly balance. Despite this fact, many of us feel that we are alone in our financial struggles when suffering from less-than-great credit.
This couldn't be further from the truth. The total amount of US credit card debt hit $764 billion in Q1 of 2017. A lot of people have less-than-optimal credit. That shouldn't mean you can't qualify for a personal loan.
To help you get the financial support you need, here's what you need to know about getting a loan with no credit.
How To Get A Personal Loan With No Credit
Before we begin, let's examine our terminology.
What Qualifies As Bad Credit?
The FICO score is the standard against which credit scores are judged against. The average FICO score in the United States is 699, as of April 2016.
FICO scores tend to range between 300 and 850. A FICO score of 550 or below is generally construed as 'bad credit.'
According to FICO, approximately 11.9% of American have a score below 550. This is down from 16% in 2009, which is a good sign. There's still plenty of people who may be looking for ways to get a loan even if their credit is still on the mend.
Signs You Might Have Bad Credit
We don't always check our credit score as often as we should. The National Foundation for Credit Counseling reports that 60% of Americans haven't checked their credit score in a year or more.
You might have bad credit and not even know it.
Warning Signs Of Bad Credit Include:
- Your credit card interest rates are higher than average
- You only make the minimum payment on your credit card
- You have a history of late payments
- Your checking account is overdrawn regularly
- You can't get a cell phone plan
If it turns out you have bad credit, don't lose hope! There are loan options for people with bad credit or even no credit at all!
How To Get A Loan With Bad Or No Credit
There are several ways someone can get a personal loan with no credit. This could be for moments when you just need cash in a hurry. No credit loans could be a way to build or improve your credit score, as well.
24 hour payday loans online are personal loans for a small amount of money. No form of credit is usually required. You'll just need proof of income and some form of personal identification. Things to know about $1000 payday loans.
Payday loans regularly range between $100 and $1000. They're meant to help you get through until your next paycheck.
Payday loans can be a lifesaver when times are tight. The high-interest rate makes them best as a last resort, however. Interest rates for payday loans can run up to 500% APR.
It's also possible to grow accustomed to the extra income and fall into a debt spiral. Payday loans should really only be used in case of emergencies. Avoid relying on them regularly, as well, or else you could end up in more debt than you started with.
Visit A Credit Union
Credit unions are similar to banks but they operate in a non-profit capacity. Credit unions are set up to pass on their profits to their members as lower fees instead of shareholders. They are often more lenient on offering loans to people with less-than-prime credit scores.
A credit union may be more likely to hear your case and offer you a loan based on your character or future earning potential. Credit unions work similarly to how a small local bank might have in the past.
Credit unions tend to be on the lookout for new borrowers, as well. People tend to think of the larger banks and lenders first when looking for a loan. If you decide what terms you're looking for in a loan ahead of time, odds are good that you could find a credit union to meet that need.
Find A Co-Signer And Build Credit
Co-signers are an established way to build up your credit score. A co-signer is someone who is willing to vouch for you who will assume the financial risk in case you default on your personal loans.
You'll need to find someone you can trust to be a co-signer for a personal loan. They'll need to trust you, as well, as they'll be the ones on the line should something go wrong with your personal loan.
Borrow From Friends And Family
The people we know and love can be a source for obtaining personal loans if you have no credit or bad credit. Proceed with caution, however, as money can cause a lot of stress in relationships. Get an installment loan with equal monthly payments.
Failing to repay or defaulting on a personal loan with close friends or family runs the risk of permanently damaging that relationship. Think of the debt collectors that you've dealt with in your life. Now imagine that acrimony coming from your best friend or even your parents.
The people that know you best likely know what you're capable of, as well. They're more likely to overlook a spotty credit history if you need a personal loan for a good reason. They likely have a broader idea of your future earnings potential than an outside lending institution, as they've known you longer and more thoroughly.
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