Being that I used to work with loans, I figure I’ll have a pretty good prospective on getting a personal loan without credit.
For many people, obtaining a loan, especially when they first turn 18 can be extremely difficult, however it isn’t impossible. There are many ways to develop credit so that you can easily get yourself a personal loan.
1. First think you need to think about is how soon you need this loan. If you need it immediately then your options are extremely limited, however if you need it in 3-6 months, then there are methods that will quickly boost your credit score to the point where you can easily get a loan.
2. If you need a loan immediately, you are going to have to find a co-signer. This person is someone that already has established credit and has a high credit score. Generally the best people to ask are friends and family. Many people aren’t going to want to co-sign, because this puts their credit at risk if you don’t pay on time or default on the loan, but if someone knows that you are responsible financially, they may be willing to take the risk. Most will only take this risk if they know it is a necessity that you get the loan and many will only do it for a small amount. So ask around and see what you can get.
3. If you can’t get a co-signer or you have more time to build your credit, the best thing to do is get a credit card. However, many credit card companies aren’t going to just issue a card to anyone. So, I have found the quickest means of boosting your credit score is to get a secured credit card. Essentially this is a credit card that you secure the money. It isn’t a real credit card, because you are actually fronting all of the money for it, but you still get charged fees, and they still report to credit agencies. This is relatively expensive means to obtain credit, but it is the fastest method without generating numerous inquiries to your credit, which can be more damaging than good.
A few good companies that will report to your credit agencies are :
Eufora : www.euforprepaid.com
Orchard Bank : www.orchardbank.com
While they charge fees to maintain this service to prove that you can make payments, the best bet is to put your money in there and never use the card, because this will raise your score. After a period of time, normally a year, you can take this money out of these accounts and close them out. Most require a $200-$500 minimum deposit to start the account.
3. Apply for low balance credit cards. These are generally the easiest to obtain, because there is a limited risk for the company that lends you the money. Don’t spend the money on the cards, just get them, and save them for an emergency. Using them will only create debt, which can hurt your credit if you have too much of it.
4. If you are looking to get a new car, then apply for one through the dealership. Even people with no credit can get loans through the parent company of the car. Make sure that you are buying a NEW car because it is easier to get a loan for these, because the manufacturer stands to gain from this sale, so they will be more inclined to approve the loan. Even people with horrible credit can get a new car for this reason. You might be limited substantially on price, but if you have a good enough income, then that can help out quite a bit as well.
The biggest thing is to not get discouraged, over time your credit will grow as you get more items populating your report. Just make sure that you aren’t overextending yourself and overusing your credit and should be extremely easy to obtain credit after you already have some.