How to Get a Loan with No Credit
Ask a direct relative to co-sign.The most traditional way to get a loan without having your own credit score is to piggyback on the good credit history of someone else., Get a personal loan from family or friends.
Step-by-Step Guide
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Step 1: Ask a direct relative to co-sign.The most traditional way to get a loan without having your own credit score is to piggyback on the good credit history of someone else.
A co-signer agrees to take responsibility for your loan debt if you should falter.
A direct relative, like a father, mother, brother, or sister, will usually be your best option.
You could go to extended family or close friends if you have no other alternatives, but since these relationships are often not quite as strong as those made with direct relatives, they may take more of a beating if you encounter difficulties in repaying your loan.
Make sure that the co-signer understands the risk.
Your loan will reflect on their credit report, so if things go bad, their credit score will take a dip.
The co-signer is also responsible for your debt, so if you fail to pay, it falls to him or her to pay it off in your place.
Choosing a co-signer with a high credit score will improve your chances of securing a loan better than if you were to choose a co-signer with mediocre credit.
A lender wants to make sure that the loan will be repaid.
If your co-signer has a good credit history, that lender will feel more confident about whether or not its money will be returned. -
Step 2: Get a personal loan from family or friends.
If you have a relative or close friend who is financially capable, you might be able to get a direct personal loan from that person, especially if he or she has some idea of how responsible you can be with your money.
Treat this personal loan as a serious business transaction to avoid straining the relationship later on.
Traditional advice suggests that you never borrow money from family or friends.
This situation could quickly get ugly, especially if the exchange of money is poorly documented, and one or both sides could end up feeling cheated.
It should be used as a last resort and you must be extremely careful to avoid wrecking your relationship.
Create a written agreement defining the terms of the loan.
Your document needs to include the interest rate, how much money is being borrowed, how much needs to be paid off monthly, when the loan needs to be paid off in full, any collateral you offer for the loan, and any consequences you will face if you fail to repay the money.
Check out legal help websites like LegalZoom (https://www.legalzoom.com/legalforms/) and Rocket Lawyer (http://www.rocketlawyer.com/legal-documents-forms.rl) for promissory note forms.
Detailed Guide
A co-signer agrees to take responsibility for your loan debt if you should falter.
A direct relative, like a father, mother, brother, or sister, will usually be your best option.
You could go to extended family or close friends if you have no other alternatives, but since these relationships are often not quite as strong as those made with direct relatives, they may take more of a beating if you encounter difficulties in repaying your loan.
Make sure that the co-signer understands the risk.
Your loan will reflect on their credit report, so if things go bad, their credit score will take a dip.
The co-signer is also responsible for your debt, so if you fail to pay, it falls to him or her to pay it off in your place.
Choosing a co-signer with a high credit score will improve your chances of securing a loan better than if you were to choose a co-signer with mediocre credit.
A lender wants to make sure that the loan will be repaid.
If your co-signer has a good credit history, that lender will feel more confident about whether or not its money will be returned.
If you have a relative or close friend who is financially capable, you might be able to get a direct personal loan from that person, especially if he or she has some idea of how responsible you can be with your money.
Treat this personal loan as a serious business transaction to avoid straining the relationship later on.
Traditional advice suggests that you never borrow money from family or friends.
This situation could quickly get ugly, especially if the exchange of money is poorly documented, and one or both sides could end up feeling cheated.
It should be used as a last resort and you must be extremely careful to avoid wrecking your relationship.
Create a written agreement defining the terms of the loan.
Your document needs to include the interest rate, how much money is being borrowed, how much needs to be paid off monthly, when the loan needs to be paid off in full, any collateral you offer for the loan, and any consequences you will face if you fail to repay the money.
Check out legal help websites like LegalZoom (https://www.legalzoom.com/legalforms/) and Rocket Lawyer (http://www.rocketlawyer.com/legal-documents-forms.rl) for promissory note forms.
About the Author
Nancy Brooks
Experienced content creator specializing in creative arts guides and tutorials.
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