How to Get a Loan With No Credit

To get a loan with no credit, start by visiting a credit union, which are generally more lenient than banks. If that fails, try asking family and friends for help.

For those without an existing credit history, it can be difficult to get a loan from traditional lenders, such as banks, which primarily base loans on credit scores. People with no credit history, or even worse, with a bad credit history, are considered risky consumers by banks and other main lending institutions. These entities have more stringent standards for issuing loans to begin with. With the slightest inkling that the loan won't be repaid on time and in full, many lenders refuse to make loans. This can leave consumers feeling like they don't have options for securing a loan. However, there are alternative ways to safely get a loan without falling victim to sky-high interest rates and predatory lending schemes.

Credit Unions
To start, people can go to their local credit union. Credit unions, like commercial banks, are legally authorized to allocate funds for loans. The main difference between banks and credit unions is that banks are owned by shareholders, who are out to make a profit from the bank's activities while credit unions are community-based organizations owned by their members, who have no financial interest in the credit union's activities. Therefore, credit unions have less formal requirements for allocating loans. They're more likely to issue loans based on other factors, such as personal qualities and the promise of a loan repayment, even if the individual making the request doesn't have a credit history. Quite often, it helps for people to approach credit unions with which they have a base connection, say experts at This means people with a military background, for instance, can look for a credit union like the Navy Federal Credit Union, which is more likely to sympathize with their needs.

Family and Friends
Another way to get a loan, and perhaps the simplest, is by making a request from family and friends for money. The danger of failing to make a loan repayment may result in the loss of personal relationships, but it won't affect a person's credit score. In borrowing from family and friends, three is often the added benefit of not having to pay back interest on the loan, which can save thousands of dollars during the course of the loan's lifespan. Although requesting loans from family and friends is a less formal process than making the request through a credit union or formal lender, it's important for people in this position to draft legally valid written documents with certain terms and conditions, such as when they will make loan repayments and what recourse the lender has if the loan cannot be repaid on time.

While it can be difficult for a person with no credit history to borrow money, the process becomes much easier with the assistance of financially capable co-signer. In many cases, credit unions, banks and other lending institutions are more willing to accept the request of a person without a credit score for a loan if he or she approaches the prospective lender with a financially capable partner. A person who gets a loan with a co-signer enjoys the benefit of an improved credit score with each installment paid on time and in full. Failure to make payments, however, damages the credit score of both parties.