How to get a loan when you have no credit

Having no credit can make it more difficult to get approved for a mortgage, auto loan, personal loan, credit card, or any other type of credit. However, it is possible to get a loan with no credit.  Read on to learn your best options.

If you're looking to get a loan with no credit history, here are four strategies worth considering:

1. Look for lenders that accept non-traditional credit histories

Even without a credit score, there may be other ways to prove to a bank that you're a trustworthy borrower. Some lenders will accept alternative data like bank account activity and payment history towards rent, utilities, and other bills. 

To get approved for a loan using your non-traditional credit history, you may need to contact a lender directly. And it will be even better if you can find a bank or credit union that has a local branch near you so that you can talk to someone face-to-face.

2. Ask for a Payday Alternative Loan (PAL) from your credit union

If you need emergency cash and you are a credit union member, you should check to see if it offers Payday Alternative Loans (PALs).  

These unsecured loans come with terms of one to six months and borrowed amounts can range from $200 to $1,000. Unlike payday loans, PAL application fees cannot exceed $20 and the maximum interest rate is 28%. 

3. Obtain a secured loan by putting down collateral

Since unsecured loans don't require any collateral, lenders tend to require that borrowers have strong credit scores in order to mitigate their risk. However, it could help you secure a loan, even with no credit, if you're able to put down something of value as collateral.

In addition to more lenient credit requirements, secured loans may also offer better interest rates or terms. But the downside is that your collateral will be at risk if you miss a payment or default.

4. Borrow from your 401(k)

If you have no credit and need quick access to a large chunk of cash, a 401(k) loan could be a legitimate option. 
The biggest advantage of 401(k) loans is that you won't be dealing with a lender whatsoever so there is no credit score requirement, and as long as you stay with your employer, you'll have up to five years to pay back the loan in full.

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