Can You Get a First-Time Personal Loan With No Credit History?


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We aren’t born with a credit history and, ironically, one of the only ways to build a credit history is to take out credit — which can be hard to do if you don’t have any credit history. Does that mean if you have little to no credit history, you can’t get a personal loan?

Not necessarily. But you may have a harder time qualifying for a loan with favorable interest rates. Read on to learn why a credit score is such an important factor in the loan application process, how to qualify for a personal loan without a substantial credit history, and how no-credit-check personal loans work.

What a Personal Loan Is and How It Works

Personal loans are a type of lending product that allows consumers to borrow money to use for a wide variety of purposes. There are typically few limitations on what you can use a personal loan for, unlike a mortgage or student loan that dictates what the borrower can spend the borrowed funds on.

Personal loans are available through banks, credit unions, and other lending institutions. With this type of loan, you receive the proceeds (or principal) in one lump sum then repay it, plus interest, in fixed monthly installments over the term of the loan.

What Is a Credit Score?

A credit score is a three-digit number used to predict how likely you are to pay your bills on time. Your credit scores (yes, you have more than one) are calculated using information from your credit reports. Different companies use different credit scoring models, but most take the following factors about a person’s financial history into account:

  • Bill-paying history
  • Current unpaid debt
  • Number and type of loan accounts you currently have
  • How long current loan accounts have been open
  • How much available credit is currently being used
  • New applications for credit
  • Financial events like debt in collections, bankruptcies, or foreclosures

When you apply for a loan, the lender will typically take your credit score into account to determine if they should lend you money, how much money they should lend you, and at what interest rate. The higher someone’s credit score is, generally the easier it is to qualify for lending products with low interest rates.

There are many different types of credit scores and scoring models. Your credit score depends on the credit scoring model used by the lender you’re applying with. Each lender also has its own personal loan credit score requirements.

How Do You Find Your Credit Score?

While you may not be able to track down every potential credit score you have, there are some easy ways to learn your FICO credit score, which is one of the most widely used credit scoring models. This can give you an idea of what your scores likely look like across the board.

  • Credit card or other loan statements: You can often find your credit score by looking at your monthly credit card or loan statements or by logging into your account online.
  • Nonprofit counselors: If you’re working with a nonprofit credit counselor or HUD-approved housing counselor, those professionals can often provide you with a free copy of your credit report and credit score.
  • Credit score services: You may be able to get your credit score for free from a credit score service as part of a free trial. But be careful about getting locked into a service that charges a monthly fee.
  • Credit reporting agencies: You can buy your score directly from the credit reporting companies.

What You Can Do if You Don’t Have a Credit Score

If you’re trying to get a personal loan with little to no established credit, you may run into some challenges. Here are some steps that can help.

Establishing Credit

First-time personal loans for no-credit-history borrowers can be hard to get. To get around this hurdle, you’ll want to start establishing credit. One way to do this is to become an authorized user on a trusted friend’s or family member’s existing credit account. Another way is to apply for a secured credit card backed by collateral. With each option, as you make on-time payments, you’ll begin to establish a credit history.

Finding a Cosigner

Another option that can make it easier to qualify for credit products without a strong credit history is to add a cosigner (or co-applicant) to a loan or credit card. When lenders see that someone else (someone with good credit) is willing to make payments on the original borrower’s behalf (if they fail to do so), they have a lot more confidence in lending them money.

Using Collateral

Adding collateral to a personal loan means that the lender has something they can seize and use to recoup their losses if the borrower defaults on their payments. For example, auto loans are secured by the car the loan is financing. Before using collateral, a borrower needs to make sure they can make their loan payments on time each month or they risk the lender taking possession of their collateral.

Personal Loan Options With No Credit History

If a borrower is really struggling to find a personal loan because they don’t have a credit history, they can pursue a loan that doesn’t require a credit check. This type of lending product does exist but often comes with high interest rates and fees to make up for the risk the lender feels they are taking on.

In some cases, loans that don’t require credit checks, like payday loans, can be predatory, so consumers should make sure they know what they’re getting into when taking out this type of personal loan.

Applying for a Personal Loan With No Credit

Some lenders offer personal loans with no credit check. Since they can’t rely on your credit history, they will typically focus on other indicators of your ability to pay back the loan, such as your income, employment history, rental history, and any previous history with the lender. When applying for a personal loan with no credit check, it’s important to read the fine print and carefully weigh the benefits against the costs. Lenders will often charge higher interest rates and impose more fees to lessen their risk.

Checking Your Personal Loan Rate

If you’re in the market for a personal loan, it’s a good idea to research different lenders to find one that’s best for your needs. As you compare lenders, take note of their minimum credit requirements, loan amounts, repayment terms, funding time, and whether or not they offer joint, cosigned, or secured loans (which may help you get a lower rate).

Once you’ve identified a few lenders you prefer, it’s time to prequalify – this only involves a soft credit check and gives you a preview of the loan offers you may receive, including your estimated annual percentage rate (APR).

This article originally appeared on and was syndicated by

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891  Opens A New Window.(Member FDIC). For additional product-specific legal and licensing information, see Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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5 Ways to Get Your Finances in Check in 2024

    5 Ways to Get Your Finances in Check in 2024

    A Money Girl podcast listener named Piper says, “I’m a big fan of your podcast and want some advice before moving forward with my finances. I’m 23 years old, just started my first job, and make $60,000 with an extra $9,250 as reimbursement for traveling full-time. I have student debt and really want to get rid of it. But I also want to contribute to a Roth, save for emergencies, and buy a car. My company matches up to 6% on retirement contributions, so I was planning on contributing that much and paying off my loans at the same time. What do you think my financial plan should be?”

    Thanks for your question, and congrats on landing your first job, Piper! We all have limited financial resources to manage, so knowing what to prioritize is critical for achieving your goals as quickly as possible. As we settle into 2024, it’s the perfect time to create or revisit your financial plan.

    This article (and podcast episode) will guide you when you’re unsure what to do with your money or are trying to make the best financial decisions this year.

    While getting out of debt is always a wise financial goal, I encourage you to prioritize it in the context of your entire financial life. In some cases, aggressively paying down debt ahead of schedule is the wrong financial move. First, carefully consider how much emergency money you should have and how that stacks up with what’s actually in the bank. 

    A cash reserve should be your top financial priority because it keeps you from going into debt if you unexpectedly lose your job or business income or have significant unexpected expenses, like medical bills or car repairs.

    How much emergency savings you need is different for everyone. For instance, if you’re the sole breadwinner for a large family, you may need a bigger financial cushion than a single person with no dependents.

    A good rule of thumb is to accumulate at least 10% of your annual gross income. For instance, since Piper earns $60,000, she could aim to maintain at least $6,000 in her emergency fund. 

    Another way to determine your target savings is by basing it on your average monthly living expenses. For instance, add your costs and bills, such as food, housing, utilities, insurance, and transportation. Then multiply the total by a reasonable period, such as from three to six months. 

    For example, if your monthly living expenses are $3,000 and you want a minimum three-month reserve, you need a cash cushion of $9,000. Or double that amount for a six-month fund. 

    If you’re struggling to build savings, you might start with a small goal, such as setting aside 1% of your income or $500 by a specific date. Then increase your goal annually until you reach a healthy reserve balance.

    Even if you can only save a small amount each month, I always say that starting small is better than not starting at all! Consider automating your goal with a recurring transfer from your checking to your savings every week or month. After a while, you might not even miss the money. 

    Remember that your financial well-being depends on having cash to meet living expenses in an emergency, not on paying a lender ahead of schedule. So, Piper, your homework is to determine how much emergency savings you need and set a goal to fill any gap as quickly as possible. 

    Note that your emergency money should never be invested because that exposes it to risk. Its purpose is safety, not growth. So, please keep it in an FDIC-insured high-interest savings account where it won’t lose value and will be sitting there when you need it.

    To sum up, your first step in creating a financial plan is ensuring you have enough cash. Anytime you’re unsure about a financial decision or what to do with your money, ask yourself, “Do I have the right amount of emergency money in the bank?” If not, that should be your number one priority.  

    designer491 / istockphoto

    If you’re dealing with financial hardship and have dangerous debts, handle them next. Piper didn’t mention having any, but I know some of you may be struggling with overdue bills, debt in collections, tax liens, or debt balances with double-digit interest rates. Getting caught up or immediately addressing them is critical because they can destroy your financial health. 

    Note that you shouldn’t pay off low-interest debts, such as student loans and mortgages, ahead of schedule because they’re relatively inexpensive and come with tax deductions. Please save that step for later in your financial plan after you’ve taken care of the essentials.


    Once you have enough emergency money or regular savings and tackle any dangerous debt, your next priority is investing for retirement. 

    Consider this: If you invest $500 a month for 40 years with an average 7% return, you’ll have an impressive retirement nest egg of over $1.3 million! But if you focus on paying off debt ahead of schedule and don’t start investing until a decade before retirement, you’d have to invest over $7,500 a month to have $1.3 million in the bank. 

    In the first scenario, where you start investing early, you end up with $1.3 million by socking away a total of $240,000 over four decades. But the second scenario, where you start late, requires you to save $900,000 over a short period to have $1.3 million for retirement.

    In other words, by investing early, you achieve the same financial goal but spend $660,000 less! That’s some serious savings you don’t want to miss. Investing small amounts over a long period allows you to fully leverage the effects of compounding, where you earn interest on your accumulated growth.

    So, if you take one lesson from this show, it’s that not procrastinating your investing makes the difference between scraping by or having a comfortable lifestyle down the road.


    A good rule of thumb is to invest at least 10% to 15% of your gross income for retirement as soon as you begin your career and have reasonable emergency savings in the bank. Remember that investments don’t count as your cash reserve because they’re not entirely liquid and get exposed to short-term risk. 

    For example, if you’re like Piper and earn $60,000, make a goal to contribute at least $6,000 annually to a tax-advantaged retirement account, such as an IRA, or a retirement plan at work, such as a 401(k) or 403(b). 

    Piper, you mentioned getting a 6% match on your workplace retirement contributions, which is fantastic. Always contribute enough to max out an employer match. However, I recommend you bump it up and contribute at least 10% per year to your workplace Roth.

    You can contribute up to $22,500, or $30,000 if you’re over age 50, to a workplace retirement account. Anyone with earned income (even the self-employed) can contribute up to $6,500, or $7,500 if you’re over 50, to an IRA starting next year. 

    Those increased limits are just some retirement account changes I covered in a previous show. So be sure to check it out if you missed the previous podcast, episode 754.

    The sooner you make maxing out a retirement account a habit, the better. Starting to invest early is like getting your retirement on sale because you contribute less and still see your account value mushroom over time–brilliant!


    An essential part of taking control of your finances is having adequate insurance. Many people get into debt in the first place because they don’t have enough of the right kinds of coverage—or they don’t have any insurance at all.

    Make sure you have health insurance to protect yourself and those you love from an illness or accident jeopardizing your financial security. Also, review your auto and home or renters insurance coverage. And by the way, if you rent and don’t have renters insurance, you need it. It’s a bargain for the protection you get; it only costs $185 per year on average.

    And if you have family who would be financially hurt if you died, you need life insurance to protect them. If you’re in relatively good health, a term life insurance policy for $500,000 might only cost a couple of hundred dollars per year.

    An often-overlooked coverage is disability insurance, which replaces a portion of your income if you get sick or injured and can’t work. You’re actually more likely to have a disability that prevents you from working than to die.

    Piper, if you get these coverages through work, that’s terrific. However, if you don’t have employer-provided insurance or are self-employed, purchase these critical products on your own. It’s always a good idea to review your needs with a reputable insurance agent or a financial advisor.

    SolisImages / istockphoto

    Once your savings, retirement, and insurance needs are on autopilot and you have money left over, it’s time to reach other financial goals. Piper mentioned wanting to buy a car and repay her student loans early.

    Remember that student loans and mortgages come with relatively low interest rates and tax deductions, making them cost even less on an after-tax basis. That’s why debts with higher interest and no money-saving tax deductions, such as credit cards, personal loans, and auto loans, should typically get paid off first.

    The bottom line is that goals outside of saving for emergencies and investing for retirement are wonderful if you can afford them. Make a list of your financial dreams, what they cost, and how much you can afford to spend on them each month.

    So, before you rush to prepay a student loan or mortgage, make sure there isn’t a better use for your money. Being completely debt-free is a terrific goal—but keeping inexpensive debt and investing your excess cash for higher returns can make you wealthier in the long run.

    Piper, I hope these five steps give you and everyone reading this clarity about creating a personal financial plan. In general, or if you’re trying to set financial New Year’s resolutions for yourself this time of year, following these steps will help you make the most of your money, protect it, and build wealth for a secure future.

    This article originally appeared on and was syndicated by

    Lyndon Stratford / istockphoto


    Featured Image Credit: fizkes/istockphoto.