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How to Get a Personal Loan with No Credit

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There may be times in your life when you need a personal loan. But if you’re just starting out, it can be difficult to get a loan with no credit. To help you navigate that hazy period when your credit file is thin, we’ll discuss how to get a personal loan with no credit, what options you have, whether a “no-credit-check” loan is a good idea, and alternatives worth considering.

Can I get a loan with no credit?

Technically, it is possible to get a loan with no credit score. But if you try to get a loan with no credit score you’re likely to be hit with a high interest rate and less-than-favorable terms. Your lack of credit scares lenders. The tool they would normally use to judge whether or not you’re likely to pay back the loan (your credit score) is either nonexistent or too thin to tell them what they need to know.

Here are a few reasons you may not have a credit score:

  • You’re just moving into adulthood and haven’t had the time or opportunity to build a credit score.
  • You haven’t used credit in the past two years. Lack of activity puts a stop to the information credit bureaus need to generate an accurate score.
  • You’re a recent immigrant, just starting out in the U.S., and must build a credit score from scratch.

Having no credit score is not the same thing as having a poor credit score. When someone tells you you have no credit score it simply means that there is no clear record of how you behave as a borrower. Personal loans for those with no credit are borrowing options specifically designed for borrowers who don’t have a lengthy credit history.

It can be tough to get a loan with no credit. Even if you have credit, the credit score needed for personal loans can get a little confusing. Whether you want an auto loan, a loan to finance a new pool, or a personal loan to help cover an emergency situation, a strong credit score is key to opening the credit door.

What loan options are available if I have no credit? 

Let’s say you find yourself in a pinch and need to get a loan with no credit. You’ve borrowed your uncle’s RV, are vacationing in the mountains, and the RV breaks down. You don’t know what’s wrong but are pretty sure there’s going to be an expensive repair in your future. Your cash reserves are low and you don’t know where you’ll find the funds to get the RV up and running again. Qualifying for emergency loans without a credit score is not easy, but it is possible. To get a loan with no credit, it pays to know your options. 

Banks and credit unions

If your credit history is practically nonexistent, you may be surprised by your ability to get a loan with no credit through your home bank or credit union. As long as you have an established relationship, a bank or credit union can easily pull up your account to check things like how regularly you make deposits, if you spend more than you bring in, and generally, how responsibly you handle your account. It may not be a credit score, but it does give them a sense of how you are likely to behave as a borrower.

If you know you’ll need a personal loan in the near future, consider joining a credit union. Some of the lowest interest rates and best terms are offered by credit unions across the country. Also, if you’re a member, credit unions tend to be more willing to gauge your creditworthiness by using information outside your credit score.

Membership in a credit union is often based on criteria such as the county in which you live, who your employer is, if you’ve been in the military, or whether you’re a member of a specific organization. There are so many credit unions in the U.S. that you should easily be able to find one that fits your situation. The ability to get a loan with no credit can make it worth the trouble.

Family and friends

It will come as no secret to your family and friends that you’ll need help to get a loan if you have no credit. They’ll understand if you haven’t had time to build a credit history. If you find yourself in an emergency situation, ask for help from those who care about you.

If they agree to lend you money, treat it as you would any loan. Write up an agreement outlining:

  • How much you’re borrowing
  • How often you will make a payment
  • How much the payment will be
  • When the loan will be paid in full

And then stick with it. There’s nothing worse than losing the trust of someone kind enough to come to your rescue.

Cosigner

Most people know how tough it is to get a loan with no credit. Still, the people who care about you may not have the cash to help. If someone in your life has a terrific credit score, ask them to become a cosigner on a loan.

As long as you have internet access, you can apply for a personal loan without a credit score online. A cosigner with a strong credit score improves your odds of being approved for a loan. It also increases the likelihood you’ll score a low interest rate and attractive repayment terms.

Here’s how it works: You, along with your cosigner, apply with several lenders to compare offers. Both of your names are on the loan application. Lenders conduct a credit check and base their decision both of your credit scores. Your cosigner’s strong credit helps you to get a loan with no credit.

Then, lenders run a “soft credit check,” meaning it won’t impact your credit score. When they approve your application (often within minutes), they tell you what your interest rate and repayment terms will be.

Once you decide on a lender, you let them know that you want to move forward. That’s when they conduct a “hard credit check” that will briefly ding both of your credit scores by a few points. If that credit check looks good, the lender provides loan paperwork for both of you to sign and begins the process of depositing funds into your bank account.

Each on-time monthly payment is reported to the credit bureaus and helps you build a positive credit history. But if you fail to make a payment, it’s your cosigner who’s on the hook. You owe it to your cosigner to make all payments as promised.

Secured loans

There are two types of personal loans: secured and unsecured. A secured loan means that you promise to give the lender something you own (an asset) if you can’t pay the loan. This is known as “pledging collateral.”

That asset may be anything of value, from a retirement account to fine art or jewelry. The lender knows that if you miss payments, they have the option of seizing the asset and selling it to recoup their losses.

It’s usually easier to qualify for personal loans without credit if you can offer collateral.

Military assistance

If you’re in the military and need to get a loan with no credit, a military aid society may offer assistance. For example, the Navy-Marine Corps Relief Society, Air Force Aid Society, Army Emergency Relief, and Coast Guard Mutual Assistance offer grants and interest-free loans to their service members in need.

Paycheck advances

Some employers offer paycheck advances. These are loans repaid through deductions from future paychecks. Often, these programs are run through third-party lending companies and offer all employees the same interest rates and terms — regardless of their credit scores. 

If you need to get a loan with no credit and your employer offers a paycheck advance, it can benefit you in two ways:

  • You’ll get the loan you need when you need it.
  • It can help build your credit score. 

Before you take out a loan, make sure you understand how much it’s going to cost you in interest and fees. Also find out about repayment terms and make sure you can afford the monthly deduction from your paycheck.

Personal loans for bad credit

As we mentioned, having a thin or nonexistent credit score is not the same as having a bad credit score. Still, lenders willing to take a risk on borrowers who need to get a loan with no credit are often the same lenders who take a risk on borrowers with poor credit.

With personal loans for bad credit, you can expect to pay a higher-than-average interest rate and may not land the best repayment terms. Still, taking out a small personal loan from one of these lenders gives you the opportunity to make full, on-time payments that will be reported to the major credit bureaus.

A steady stream of positive monthly reports to the credit bureaus will build your credit score. If you’re going this route, look for a loan with no prepayment penalty. Then, come up with a plan to repay the funds as quickly as possible. This strategy will help you save money on interest.

Online lenders that look beyond credit

Some lenders cater to borrowers looking to get a loan with no credit by weighing other things. They might look at where you attended college, your major, and grade point average. In other words, they attempt to figure out how responsible you’ve been so far and how likely you are to be in the future.

Be careful, though: Many lenders that offer personal loans to those with no credit history charge high interest rates and fees.

Credit-builder loans

To get a loan with no credit you may want to look into a credit-builder loan. With a credit-builder loan, you apply and are approved for a small loan. You make payments on the loan, including interest, and those payments are reported to the credit bureaus. It’s only after all payments are made that you have access to the money you borrowed.

A credit-builder loan is not a good option if you need money right away.

What is a no-credit-check loan? 

As the name implies, a no-credit-check loan requires no credit check. That doesn’t mean you automatically qualify, though. Lenders look at things like employment, income, and whether you have collateral to offer. And these loans are often overly expensive, causing borrowers to sink into a vicious cycle of debt. Be very careful if you’re considering a no-credit-check loan.

There are many no-credit-check loans on the market. Both a payday loan and title loan are types of no-credit-check loans. Both are prohibitively expensive, often charging 400% or more in interest. And both can trap you in a cycle of borrowing, then needing to borrow more to pay the first loan. Some no-credit-check lenders give their companies fancy names designed to sound like mainstream banks. What all no-credit-check loans have in common is prohibitively high interest rates, exorbitant fees, and terms that make it difficult to repay the loan by its due date.

Is a no-credit-check loan a good idea? 

A no-credit-check lender does not conduct a credit check because it knows you need to get a loan with no credit and are unlikely to qualify for a low-interest unsecured loan. That’s precisely why they can take advantage of you. Despite how well they may advertise their loan products, a no-credit-check loan is never a good idea.

What alternatives are there to no-credit loans? 

In review, there are a number of ways to get a loan with no credit without resorting to no-credit-check loans. They include:

  • Banks and credit unions
  • Family and friends
  • Cosigner
  • Secured loans
  • Military assistance
  • Paycheck advances
  • Personal loans for bad credit
  • Online lenders
  • Credit-builder loans

Looking for a loan with no credit is neither fun nor easy. Getting a loan in this situation is, however, possible. If you’re looking to get a loan with no credit, go through these recommendations, find the one that fits your situation best, and go for it. If you carefully manage the loan once it’s in your hands, you’re on your way to building a solid credit score.

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Bad Credit

If You Want Consumers to Lose, Network Regulation is a Must – Digital Transactions

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After the current U.S. Congress was sworn in, a predictable chorus of merchants, lobbyists, and lawmakers demanded new interchange price caps and other government mandates to decrease credit card interchange fees for merchants. The tired attacks on credit cards are an easy narrative that focuses almost exclusively on the cost side of the ledger, while completely ignoring the cards’ important role in the economy and the regressive effects of interchange regulation. 

To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents. For decades, they have promised these interventions would eventually benefit consumers. But the lessons from the Durbin Amendment in the United States and price cap regulation in Australia is clear. Although some policymakers bemoan the current economic model, arbitrarily “cutting” rates for the sake of cuts completely ignores the economic reality that as billions of dollars move to merchants, billions are lost by consumers. 

For the uninitiated, let’s break down what credit interchange funds: 1) the cost of fraud; 2) more than $40 billion in consumers rewards; 3) the cost of nonpayment by consumers, which is typically 4% of revolving credit; 4) more than $300 billion in credit floats to U.S. consumers; and 5) drastically higher “ticket lift” for merchants. 

Johnson: “To lawmakers blindly acting on behalf of retailers, regulation is a brilliant idea—regardless of how it affects their constituents.”

These are just some of the benefits. If costs were all that mattered, American Express wouldn’t exist. Until recently, it was by far the most expensive U.S. network. Yet, merchants still took AmEx because they knew the average AmEx “swipe” was around $140, far more than Visa and Mastercard. 

Put simply, for a few basis points, interchange functions as a small insurance policy to safeguard retailers from the threat of fraud and nonpayment by consumers. Consider the amount of ink spilled on interchange when no one mentions that the chargeoff rate for issuing banks on bad credit card debt exceeds credit interchange.

Looking abroad, interchange opponents cite Australia, which halved interchange fees nearly 20 years ago, as a glowing example of how to regulate credit cards. In truth, Australia’s regulations have harmed consumers, reduced their options, and forced Australians to pay more for less appealing credit card products. 

First, the cost of a basic credit card is $60 USD in many Australian banks. How many millions of Americans would lose access to credit if the annual cost went from $0 to $60? Can you imagine the consumer outrage? 

In a two-sided market like credit cards, any regulated shift to one side acts a massive tax on the other. For Australians, the new tax fell on cardholders. There, annual fees for standard cards rose by nearly 25%, according to an analysis by global consulting firm CRA International. Fees for rewards cards skyrocketed by as much as 77%.

Many no-fee credit cards were no longer financially viable. As a result, they were pulled from the market, leaving lower income Australians, as well as young people working to establish credit, with few viable options in the credit card market.

Even the benefits that lead many people to sign up for credit cards in the first place have been substantially diluted in Australia because of the reduction of interchange fees. In fact, the value of rewards points fell by approximately 23% after the country cut interchange fees.

Efforts to add interchange price caps would have a similar effect here in the U.S. A 50% cut would amount to a $40 billion to $50 billion wealth transfer from consumers and issuers to merchants. For the 20 million or so financially marginalized Americans, what will their access to credit be when issuers find a $50 billion hole in their balance sheets? 

The average American generates $167 per year in rewards, according to the Consumer Financial Protection Bureau. Perks like airline miles, hotel points, and cashback rewards would be decimated and would likely be just the province of the rich after regulation. Many middle-class consumers could say goodbye to family vacations booked at almost no cost thanks to credit card rewards.

As the travel industry and retailers fight to bounce back from the impact of the pandemic, slashing consumer rewards and reducing the attractiveness of already-fragile businesses is the last thing lawmakers and regulators in Washington should undertake.

Proposals to follow Australia’s misguided lead in capping interchange may allow retailers to snatch a few extra basis points, but the consequences would be disastrous for consumers. Cards would simply be less valuable and more expensive for Americans, and millions of consumers would lose access to credit. University of Pennsylvania Professor Natasha Sarin estimates debit price caps alone cost consumers $3 billion. How much more would consumers have to pay under Durbin 2.0?

Members of Congress and other leaders should learn from Australia and Durbin 1.0 to avoid making the same mistake twice.

—Drew Johnson is a senior fellow at the National Center for Public Policy Research, Washington, D.C.

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Increase Your Credit Score With Michael Carrington

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More than ever before, your debt and credit records can negatively impact you or your family’s life if left unmanaged. Sadly, many Americans feel entirely helpless about their credit score’s present state and the steps they need to take to fix a less-than-perfect score. This is where Michael Carrington, founder of Tier 1 Credit Specialist, comes in. Michael is determined to offer thousands of Americans an educated, informed approach towards credit restoration.

Michael understands the plight that having a bad credit score can bring into your life. His first financial industry job was working as a home mortgage loan analyst for one of the nation’s largest lenders. Early on, he had to work a grueling schedule which included several jobs seven days a week while putting in almost 12-hour days to make $5,000 monthly to get by barely.

“I was tired of living a mediocre life and was determined to increase the value that I can offer others through my knowledge of the finance industry – I started reading all of the necessary books, networking with industry professionals, and investing in mentorship,” shares Michael Carrington. “I got my break when I was able to grow a seven-figure credit repair and funding organization that is flexible enough to address the financial needs of thousands of Americans.”

With his vast experience in the business world, establishing himself as a well-respected business leader, Michael Carrington felt he had the power to help millions of Americas in restoring their credit. Michael learned the FICO system, stayed up to date on the Fair Credit Reporting Act (FCRA), found ways to improve his credit score, and started showing others.

The Tier 1 Credit Specialist uses a tested and proven approach to educate their clients on everything credit scores. Michael is leveraging his experience as a home mortgage professional, marketing executive, and global business coach to inform his clients. He and his team take their time to carefully go through their client’s credit records as they try to find the root of their problem and find suitable financial solutions.

The company is changing lives all over America as it helps families and individuals to repair their credit scores, gain access to lower interest rates on loans and get better jobs. What Tier 1 Credit Specialists is offering many Americans is a chance at financial freedom.

Michael Carrington has repaired over $8 million in debt write-ups and has helped fund American’s with over $4 million through thousands of fixed reports. “I credit our success to being people-focused,” he often says. “The amount of success that we create is going to be in direct proportion to the amount of value that we provide people – not just our customers – people.”

Because of its ‘people-focused goals, the Tier 1 Credit Specialist is determined to help millions of Americans achieve financial literacy. It is currently receiving raving reviews from clients who are completely happy with the credit repair solutions that the company has provided them.

Today, Michael Carrington is continuing with a new initiative to serve more Americans who suffer from bad credit due to little or no access to affordable resources for repair.

The Tier 1 Credit Socialist brand is changing the outlook of many families across America. To do this, the company has created an affiliate system that will provide more people with ways of earning during these tough economic times.

As a well-respected international business leader and entrepreneur with numerous achievements to his name Michael Carrington aims to help millions of Americans achieve the financial freedom, he is experiencing today. Tier 1 Credit Socialist is one of the most effective credit repair brands on the market right now, and they have no plans for slowing down in 2021!

Learn more about Michael Carrington by visiting his Instagram account or checking out the Tier 1 Credit Specialist website.

Published April 17th, 2021



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Does Having a Bank Account With an Issuer Make Credit Card Approval Easier?

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Better the risk you know than the one you don’t.

When it comes to personal finance, nothing is guaranteed. That goes double for credit. That’s why, no matter how perfect your credit or how many times you’ve applied for a new credit card, there’s always that moment of doubt while you wait for a decision.

Issuing banks look at a wide range of factors when making a decision — and your credit score is only one of them. They look at your entire credit history, and consider things like your income and even your history with the bank itself.

For example, if you defaulted on a credit card with a given bank 15 years ago, that mistake is likely long gone from your credit reports. To you and the three major credit bureaus, it is ancient history. But banks are like elephants — they never forget. And that mistake could be enough to stop your approval.

But does it go the other way, too? Does having a bank account that’s in good standing with an issuer make you more likely to get approved? While there’s no clear-cut answer, there are a few cases when it could help.

A good relationship may weigh in your favor

Credit card issuers rarely come right out and say much about their approval processes, so we often have to rely on anecdotal evidence to get an idea of what works. That said, you can find a number of stories of folks who have been approved for a credit card they were previously denied for after they opened a savings or checking account with the issuer.

These types of stories are more common at the extreme ends of the card range. If you have a borderline bad credit score, for instance, having a long, positive banking history with the issuer — like no overdrafts or other problems — may weigh in your favor when applying for a credit card. That’s because the bank is able to see that you have regular income and don’t overspend.

Similarly, a healthy savings or investment account with a bank could be a helpful factor when applying for a high-end rewards credit card. This allows the bank to see that you can afford its product and that you have the type of funds required to put some serious spend on it.

Having a good banking relationship with an issuer can be particularly helpful when the economy is questionable and banks are tightening their proverbial pursestrings. When trying to minimize risk, going with applicants you’ve known for years simply makes more sense than starting fresh with a stranger.

Some banks provide targeted offers

Another way having a previous banking relationship with an issuer can help is when you can receive targeted credit card offers. These are sort of like invitations to apply for a card that the bank thinks will be a good fit for you. While approval for targeted offers is still not guaranteed, some types of targeted offers can be almost as good.

For example, the only confirmed way to get around Chase’s 5/24 rule (which is that any card application will be automatically denied if you’ve opened five or more cards in the last 24 months) is to receive a special “just for you” offer through your online Chase account. When these offers show up — they’re marked with a special black star — they will generally lead to an approval, no matter what your current 5/24 status.

Credit unions require membership

For the most part, you aren’t usually required to have a bank account with a particular issuer to get a credit card with that bank. However, there is one big exception: credit unions. Due to the different structure of a credit union vs. a bank, credit unions only offer their products to current members of the credit union.

To become a member, you need to actually have a stake in that credit union. In most cases, this is done by opening a savings account and maintaining a small balance — $5 is a common minimum.

You can only apply for a credit union credit card once you’ve joined, so a bank account is an actual requirement in this case. That said, your chances of being approved once you’re a member aren’t necessarily impacted by how much money you have in the account.

In general, while having a bank account with an issuer may be helpful in some cases, it’s not a cure-all for bad credit. Your credit history will always have more impact than your banking history when it comes to getting approved for a credit card.

For more information on bad credit, check out our guide to learn how to rebuild your credit.

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