First-Time Personal Loan With No Credit History

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For those new to borrowing, a first-time personal loan with no credit history can be a great way to secure some needed funds for a range of uses. While there are several noteworthy limitations to these products, they can help establish a credit history. There are ways to get approved for a bigger loan, which we will also outline in this guide.


We’ll Cover

  • What is it?
  • Where to find the best first-time personal loan with no credit history (with pros and cons)
  • Other options to help you qualify for more
  • Before you apply (loan calculator)
  • How to apply (checklist)
  • FAQs

What Is It?

A personal loan is a financial product furnished through a bank, credit union, or alternative online lender. It allows individuals and co-borrowers to access funds (usually up to $50,000) for a wide variety of purposes. They are unsecured, which means that they rely on the borrower’s financial worthiness as the primary factor to determine approval, instead of collateral.

Some lenders have specific products for first-time borrowers. These typically have low maximums, between $300-$1,000 without a cosigner, but are beneficial in that they will help establish credit to qualify for more later on.

Where to Find the Best First-Time Personal Loan With no Credit History

For those looking for a first-time loan, credit unions are the best choice.

As they are typically promoted as introductory offers, they tend to have the best terms, particularly when it comes to APR. The maximum APR is around 18%, with rates starting as low as 6%. Be sure to compare lenders, as conditions will range.

While they usually have low limits, you may be able to find one up to $5,000. They are easy to apply for and are a great way to get started. Some may require a cosigner in order to qualify, depending on how much you want to borrow.

Pros Cons
No credit check required Typically low maximum amounts
Easy application and approval process Requires a cosigner to qualify for more
Great introductory interest rates  
Good way to begin establishing a credit history  

The biggest issue with these introductory offers is that most lenders don’t have a way to evaluate your worthiness as a borrower, and thus you’re not likely to get approved for much. That being said, taking one on will help establish your credit, and it won’t be long before you can qualify for more should the need arise.

Other Options to Help You Qualify for More

Here are some other ways to increase the amount and/or get a better rate.

  • Find a cosigner in good standing, as this is the simplest way to improve your situation regardless of your credit score (or whether you even have one). There are downsides for the person who is willing to help, even if the borrower only stands to benefit. For more info on cosigners, click here.

  • Find a first-time borrower credit card to establish credit. Much like the introductory products we’ve discussed, these cards are another way to get the ball rolling and establish a credit score. They typically have a low limit of around $500, which can increase over time with a proven record of payment.

  • Consider a secured loan backed by an asset. There are other options besides an unsecured personal loan to source funds. A product backed with an asset can help increase the amount and decrease the interest rate, sometimes without reference to your credit score. There are many options that use assets as collateral from a home equity loan or line of credit to pawning a guitar.

Shop around for the best rate. Whether you’re comparing credit unions for a first-time loan, or have an established history and are looking for funds for a $50,000 remodel, it’s always important to compare lenders and find the best terms possible.

Before You Apply

Use a loan calculator to find out how much you may get approved for. Simply input your amount and reason for borrowing and compare top lenders. Once you’re pre-approved, it’s time to fill out an application.


How to Apply for a Personal Loan

Whether you’re shopping for a first-time product or have established a credit history, the process of applying for a personal loan is straightforward and simple compared to other types. Here is what you’ll need to complete the application.

Application Checklist

  • Credit Score (N/A for a first-time product)
  • Government-issued Identification
  • Proof of residence
  • Employment and income verification including
    • Proof of employment
    • W-2 (or 1099)
    • Pay stubs
    • Bank statements
  • Cosigner information (all of the above), if applicable

If you’re still unsure as to whether a personal loan is right for you, here are some frequently asked questions.


Q: Is taking out a personal loan an option for college?
A: Many without a credit score may be high school or college-aged and are simply looking to finance their continuing education. In the case of borrowing for school, there are better options available through the government as well as supplemental private student loans that take future earning potential as well as other factors into account. Credit score is not usually a contributing factor. For more about student loans, click here.

Q: What about financing a car?
A: Auto financing uses the vehicle as collateral, which is the primary justification for approval. Creditworthiness plays a part, but a secured car note usually has better rates than a personal loan.

Q: I’m new to borrowing, what do I need to watch out for?
A: Avoid predatory loans at all costs. The main appeal of payday loans (or cash advances) is that you don’t need a credit score in order to qualify. Unfortunately, they have ridiculous APRs and penalties and often trap people in an endless cycle of debt.

Q: How long do I have to repay a personal loan?
A: Depending on the amount, it can range from 1-7 years. Smaller amounts typically have shorter repayment timelines.


For those new to borrowing, it can be a challenge getting approved for the amount you need. Establishing a credit history with a small personal loan can be a great way to get the ball rolling.