It’s not just 18-year-olds that have little to no credit history. There are a lot of ‘credit invisible’ people both in Australia and the rest of the world. But what does that really mean and can you still borrow money? We break down everything you need to know about loans for people with no credit history.
Overview
- What does no credit history mean?
- Why do I have no credit history?
- Is it bad to have no credit history?
- How to get a loan with no credit history
- Can you get a personal loan with no credit score?
- Applying for a loan with no credit history
- How to start building a good credit history
- FAQs
What does no credit history mean?
If you have never applied for credit before you probably have a limited or ‘thin’ credit history file. This means that there is no record of how well you have managed certain types of debt. And because of this lenders cannot properly assess your creditworthiness – at least not using standard measures.
Having little to no credit history makes it harder to get approved for loans or credit cards when you eventually need one.
No credit history vs no credit check loans
No credit check loans are when lenders do not look at your credit report as part of the assessment process. There are a few reasons people can be reluctant to apply for a loan that needs a credit check. You might be scared that your past bad credit history will impact your chances of loan approval. Or you might have applied for other loans recently and been declined – applying for too many loans at once can negatively affect your credit score further. For these reasons, some people seek out no credit check loans.
On the other hand, no credit history loans are suited to people who have a thin or non-existent credit history file. So even if the lender checks your credit file, your non-existent history won’t be an eligibility issue.
In both cases, other types of evidence are used to verify eligibility for the loan.
Why do I have no credit history?
Here are some common reasons both younger and older generations can have limited or no credit history:
- Never having taken out a loan or credit card
- No recent credit accounts or loans
- Recently immigrating to a new country
- Paying for everything using cash or debit card
- Living with family or in a sharehouse and not paying bills directly
- Using prepaid mobile services instead of a mobile plan
- Your credit provider does not report to any credit bureaus
If any of these sound familiar to you, then you are not alone. More people are staying at home longer, not getting their driver’s licence, and struggling to enter the workforce after university. In short, all the usual credit-building life milestones get more and more delayed.
And it’s not just young people who are in this boat. If you have not needed finance for a long time, it can be just as hard to get started again.
Luckily, there are ways to get started, or restarted, on your finance journey!
Is it bad to have no credit history?
It can be harder to get a loan when you have no credit history. Some banks and lenders are starting to catch on to the changing relationship people have with credit and look at alternative data for credit scores. But there is still an old-fashioned mindset when it comes to verifying financially responsible behaviour.
Unfortunately, it makes it hard to start out on a personal loan journey for something large like a mortgage. But there are still lenders that offer loans for people with no credit history.
Small loans can be an easy way in to start developing a history of loan payment management. Many small loan lenders have a simpler eligibility process and do not require a history of repayments to verify suitability. Be careful to review the loan terms and fees before you apply though, so you understand what kind of debt you are taking on, how much you will be paying, and how it will affect your credit score. You want to make sure you’re taking the best step forward that you can in your situation.
How to get a loan with no credit history
When you apply for a no credit history loan, the lender will need to look at other evidence to verify that you are a suitable loan candidate.
Ways you can demonstrate good financial management:
- Show a history of regular savings
- Have a steady income and employment
- Don’t change jobs too often
- Have a strong rental history
Can you get a personal loan with no credit score?
It’s true, having no credit score can make it more challenging to secure a personal loan. But it is still possible to get one. Some lenders specialise in offering loans to individuals with limited or no credit history. These lenders look at other factors to assess an applicant’s creditworthiness, such as employment history, income stability and overall financial health. Do your research and approach a lender that caters to individuals without a credit score, like Swoosh. As a responsible lender, we will only offer you a loan that our assessors are confident you can repay on time. This gives you a chance to build up your credit score.
Applying for a loan with no credit history
Swoosh offers small, first-time personal loans for people with no credit history. No history and no co-signer needed. As long as you meet 4 simple criteria, you can apply for a loan today:
