If you have a poor credit score or no credit history at all, you might think getting a personal loan is out of the question. The good news is there are options for you to get a loan that does not require a credit check. Getting a loan without a credit check may not be easy, but here are a few ways to get it done. Do your research and ensure you get the best terms.
Initial Steps
The first step is figuring out if applying for a loan that doesn’t require a credit check is your only option. These types of loans often have certain pitfalls, like higher interest rates and stricter terms. They are not typically recommended for someone who could qualify for a more conventional loan.
Checking your own credit does not hurt your score and will give you a better idea of what type of personal loans you may get approved for.
Know Your Credit Score
Most people with little or no credit history have what is considered a “thin credit file,” meaning their credit history contains only a few if any, credit accounts. People with thin files often have a hard time obtaining new credit, as their lack of credit, as their lack of history makes it difficult for lenders to assess their risk.
Whether you have a thin credit file or just bad credit, you need to understand exactly what is in your credit report before applying for a personal loan so you know where you stand when talking to lenders. And you might check your credit and find that you actually have a score that allows you to apply for a regular personal loan with better interest rates and terms – which will save you money over time.
The Scoring System
Most lenders use your FICO score – which ranges from 300 to 850 – when considering you for a new loan. Within that range scores below 669 are considered “fair” and “poor,” while scores above 700 are considered “good” and “excellent” depending on where they fall. If your FICO score doesn’t fall into the good to excellent range, it might be a good idea to find a lender that will not require a check for your personal loan.
Be Prepared
Be prepared to prove your creditworthiness to a lender when asking for a personal loan without a credit check. What’s more, having the documents and records you need to prove that you are financially stable and able to pay back new debt will help boost your chances of getting approved. Here are some documents you should have when talking to lenders:
- Tax returns for the past two years
- Employment history and pay stubs or other proof of a paycheck
- Borrowing history, including a home mortgage, auto loan, student loan or other loan and evidence that you have made progress paying them off
- Documentation on credit card debt
- Bank statements
- Education records
How to establish credit when you have no credit history
Establishing and building your credit history is critical if you plan to obtain any type of loans, such as mortgage or auto loan, in the future. Finding a lender that will give you a personal loan without a credit check is a great option for getting your history off the ground. Make sure that the lender reports your account and payment history to one or all of the three major credit bureaus, and then pay all of your bills on time.
