Getting a personal loan may be easier when you have good credit because lenders want to see that you are responsible and have a history of paying your bills on time. While many lenders rely heavily on credit scores, having no credit does not automatically mean you can’t get approved.
If you’re interested in getting a personal loan but are new to the credit world and don’t have enough credit established, it could be challenging. This guide explains what “no credit” really means, how lenders evaluate borrowers without a credit history, and what options may be available if you’re just getting started.
What does it mean to have no credit?
Having no credit typically means you don’t have enough information on your credit report for a credit score to be calculated. Not everyone may have good credit or any credit at all.
| Credit situation | What it means | Typical challenge |
| no credit | No credit accounts on file, so no score can be calculated | Lenders have little data to assess risk |
| thin credit | Very limited credit history or few accounts | Limited score reliability |
| bad credit | Credit history exists, but includes missed payments or defaults | Higher perceived risk |
This is due to a variety of reasons, including:
- General avoidance of credit, such as credit cards (i.e., only using debit cards or cash)
- Living outside of the country for many years, which means they need to reestablish a credit history
- Recently immigrated to the U.S.
If you fall into any of these camps, you may still be able to obtain a personal loan without credit. If time is on your side and you can reasonably wait three to six months to build up your credit, it’s a good idea to do that first.
However, if time is of the essence, it’s worth doing your due diligence to understand what your options are before trying to obtain a personal loan.
Having no credit isn’t the same thing as having a poor score, which is a result of consistently paying bills late or not paying it at all.
What is a personal loan?
A personal loan is typically an unsecured loan that can be used for just about anything, from paying off medical bills to high interest credit cards. Unsecured means the loan is based mostly on creditworthiness rather than being backed by collateral, such as your home or car.
Personal loans generally have a simple process to apply and get funded—some lenders fund in as little as one business day directly to your bank account. Because of the accessibility of personal loans, people use them for a specific purpose, such as paying bills or funding a wedding. Personal loans also tend to have lower interest rates compared to credit cards.
Can you get a personal loan with no credit?
Yes, it’s possible to get a personal loan with no credit, but approval is generally more difficult. Many traditional lenders rely on FICO® scores as a key factor in loan decisions, so borrowers without a credit history may have fewer options. Some online lending marketplaces, such as Upstart, consider additional factors beyond traditional credit data when reviewing applications. These factors may include:
- Income and employment history
- Education or field of study1
- Debt-to-income ratio
- Bank account activity or savings patterns
This table explains common additional factors lenders may consider and why they matter.
| Factor lenders may review | Why it matters |
| Income | Indicates ability to repay |
| Employment history | Shows income stability |
| Debt-to-income ratio | Helps assess affordability |
| Bank account activity | Signals cash flow patterns |
Those who lack credit and are affected by it are more common than you might think—the Federal Reserve Board noted about 32 million American adults are estimated to be “unscoreable” in regards to a credit score.
If you have little or no credit history, it may be tricky to get a personal loan, but not impossible.
Here’s what you need to consider:
- Having little to no credit makes it more difficult for you to get approved. If you don’t get approved, you may need to spend time trying to build and establish your credit.
- Available loans may come with higher interest rates and less desirable terms, which can make the life of your loan more expensive. This is especially true if you make minimum payments or take your time paying off the loan.
Here are steps to take to if you need to get a personal loan:
1.Research and shop around different lenders.
Low interest rates are important, but look for lenders and lending platforms who take factors outside of just your credit when considering you for the loan. For example, the Upstart marketplace takes a borrower’s employment and education1 into consideration.
2.Be sure to account for any fees
For example, some lenders may charge a prepayment penalty if you decide to pay back your loan early.
3.Fill out the application.
At this point, you’ll need to submit all of the proper documentation that is required, such as bank statements and pay stubs. If your credit is thin, you may need to provide other documents such as your employment history.
4.Receive your funds.
If you’re approved, you can get your funds in as little as a day or a week, depending on the lender and your specific situation.
What if you can’t get approved with no credit?
If you do not get approved, you may want to consider ways to build your credit.
The best way to obtain a personal loan is to be fully prepared and take the time to build and maintain your credit. This can be as easy as applying for a credit card and making monthly payments on time. Here are some easy ways to build your credit quickly:
- Consider a co-signer, which is another person who will agree to pay off the loan in the event you cannot.
- If you’re a renter, you can also ask your landlord to report your on-time rental payments to the credit bureaus.
- Get a secured credit card, which is similar to a debit card in that you must load it with cash before using it. But unlike a debit card, some secured cards report on-time payments to the major credit bureaus.
- Become an authorized user on someone else’s credit card. If that person has a solid credit history, you can essentially “piggyback” off of their good standing. Conversely, if they consistently make late payments, that could also negatively impact your score.
Alternatives to personal loans for borrowers with no credit
If a personal loan isn’t an option yet, you may want to explore alternatives that can help you build credit or cover short-term needs, such as:
- Secured credit cards
- Credit-builder loans
- Authorized user status on an existing account
Each option comes with its own considerations, so it’s important to understand the terms and potential risks before moving forward.
| Option | Primary purpose | Key consideration |
| secured credit card | Build payment history | Requires upfront deposit |
| credit-builder loan | Establish credit record | Funds usually released after repayment |
| authorized user | Leverage existing credit | Depends on primary user’s habits |
Types of loans to avoid when you have no credit
If you’ve done your research, you may have likely come across payday or title loans that are relatively easy to get without any credit. But both of these loans often come with exorbitant fees and interest rates. So much so that some states have restrictions on, or have banned these types of loans completely.
Payday loans
Payday loans are often catered to those with little, no or poor credit because they are relatively easy to obtain, but the catch is the high fees and interest rates. Some payday loans charge rates of nearly 400 percent on average and often require fast repayment of the loan, usually in a few weeks.
Title loans
Title loans are often available without any credit check because it uses your car as collateral. They typically require that you own your car outright. Title loans allow you to keep your car while you have the loan but if you fail to make payments, the lender can take your car away. Title loans typically need to be repaid in 15 to 30 days.
How to monitor your credit
There are many ways to monitor your credit score.It’s important to check your score regularly because there could be errors and inconsistencies that you may not be aware of. There’s also fraud and hackers who could take your credit and open fraudulent accounts.
Check your credit report: You can do this for free from AnnualCreditReport.com—every year you’re entitled to three reports (not to be confused with your credit score) from each of the bureaus.
Check your credit score: Your bank or credit card company will likely offer this up to you for free.
Where to apply for personal loans
Shop around to find out which lenders or lending platforms take more than just your credit score and history into account. Through the Upstart marketplace, for example, factors like borrower’s education1 and employment are considered when assessing creditworthiness and credit risk. These and other factors could demonstrate a person’s ability to potentially repay the loan.
If you’re dealing with a thin credit profile, it may be more challenging to obtain a personal loan, but it doesn’t mean it’s impossible. Consider building up your credit profile if you find you aren’t getting approved.
While most loans through Upstart are unsecured2, certain lenders may place a lien on other accounts you hold with the same institution. It is important to review your promissory note for these details before accepting your loan.
FAQs about personal loans with no credit
Can someone with no credit history get approved for a personal loan?
Yes, while odds of approval are lower, some lenders may approve borrowers with no credit by evaluating factors beyond traditional credit scores, such as income and employment.
Does checking your loan rate affect your credit score?
In many cases, checking your rate uses a soft credit inquiry, which does not affect your credit score. If you submit a full application, a hard credit inquiry may occur, which could affect your credit score.
Should you build credit before applying for a personal loan?
Building credit first can increase your approval odds and may help you qualify for lower rates and better terms.
1Neither Upstart nor its lending partners have a minimum educational attainment requirement in order to be eligible for a loan.
2While most loans through Upstart are unsecured, certain lenders may place a lien on other accounts you hold with the same institution. There may be an option to secure your personal loan through Upstart with your vehicle, which will require a lien to be placed on the vehicle. It is important to review your promissory note for these details before accepting your loan.
Won't affect your credit score¹