How to get a personal loan with no credit score in the United States
Updated 2023/01/25 at 2:50 PM

When it comes to loans, your credit score is often one of the determining factors at the time of application . For this reason, many people strive to pay their debts on time to keep this number above the minimum values. Even for personal loans, which are typically low risk for banks and finance companies compared to a mortgage or business loan, this qualification often determines eligibility. However, it is not definitive.

Although it often plays a very important role, there are some strategies that can be used in advance in order to increase our eligibility and obtain the loan we want with a low credit score.

How to get a personal loan despite my low credit score?

Most financial institutions or lenders require a high credit score to grant loans , be they mortgages, business loans or personal loans. However, the latter tend to be the most flexible, allowing applicants to consider some strategies to weigh the score against them. According to Oportun , when a person needs a personal loan and does not meet this requirement, there are two alternatives that he can consider, even if his first request has been rejected:

1. Consider the use of a co-signer: the application can be re-introduced, considering all the necessary requirements, but also including the information related to a co-signer, a figure that most financial entities or lenders consider as a source of support in cases of emergency.

Basically,  co-signers agree to pay in the event that the applicant is unable to meet the payments . For this alternative to work, it is necessary for the co-signer (who can be a family member or close friend) to have all the necessary documentation (generally the same one that the applicant introduces), but also to have a good credit score, which will be very well seen by the lender.

2. Use an asset as collateral: Another option to apply for a personal loan in the United States, after a rejection or even for the first time, is to do it with a guarantee. This option is particularly effective when you do not have a good credit score or the figure of a co-signer who can support the loan that will be granted. Secured personal loans involve another figure that can be represented by a material asset (house, car or other assets) that will be used as collateral to achieve the lender’s approval.

This type of loan,  in addition to involving the requirements that the lender demands, also involves the consignment of all the documentation related to the asset  that is being used as collateral to prove its value. If they are granted and the applicant does not comply with the terms and conditions of the contract, the lender can claim his rights on the collateral that was used during the application, thus recovering the money that he granted.

What other alternatives exist?

Although the above are the most recommended, personal loan applicants with low credit history can also consider other alternatives that may involve a little more effort, but also have good results:

1. Lenders that do not emphasize credit history: Although it is an important requirement, some lenders may consider other factors to determine the risk they run when granting the loan: income tax returns, pay stubs, bank account movements, rent or utility payments, savings, etc. Many applicants can meet these requirements despite not having a good credit score, they can even become creditworthy enough to take on a loan.

2. Wait long enough for the credit score to improve: although it can be much more difficult, this alternative is not unreasonable and can be considered by all those applicants who do not need an immediate personal loan. In that sense, when the record improves, they can apply again for the loan with greater guarantees that it will be approved. In the meantime, according to Oportun , there are a few strategies that can speed up the process, including applying for a secured credit card, applying for a credit-building loan, or becoming the authorized user of someone else’s credit card.

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