How to Apply for a Loan With No Credit

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Your bank may lend to you even if you don't have a credit history.
Your bank may lend to you even if you don't have a credit history. (Image: bank image by Pefkos from <a href='http://www.fotolia.com'>Fotolia.com</a>)

Applying for a loan with no established credit history is easy. Getting approved is the hard part. However, everybody who gets credit has to start somewhere, and it is possible to get approved for a loan with no credit. If conventional lenders such as banks and credit unions turn you down, you can always apply to consumer finance companies offering high-risk loans at high interest rates. Loans from payday loan companies are another option. Better yet, create a plan for being approved for a loan at competitive interest rates.

Open checking and savings accounts with a bank or credit union, and then consider adding an investment account such as an individual retirement account. The accounts will help you establish a relationship with the bank. Maintain the accounts in good standing for several months or longer. Place as much money in the savings account as possible.

Meet with a loan officer at the bank or credit union. Tell her you have been a loyal customer of the bank with multiple accounts in good standing and that you're looking to establish a credit history by opening a loan account. Consider any advice the loan officer has, including using the money in your savings account as collateral for a loan. Offering the money as collateral could virtually guarantee approval because that completely removes the risk for the bank or credit union. If you default on the loan the bank can recover the loss by taking the money out of your savings.

Apply for a regular, unsecured loan from the bank. If you are turned down, apply for a secured loan using your savings account as collateral.

Tips & Warnings

  • Borrowing from family and friends could be an option if borrowing from a bank isn't an option. People who know you are less likely to be concerned about your lack of credit history and may offer terms that are more attractive than those offered by banks or credit unions.

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