How to Get a Personal Loan with No Credit and No Cosigner
Some of the greatest challenges new immigrants face in America are building credit and obtaining a loan. Having access to credit is all but indispensable for building a life in America, but few lenders will loan to applicants without a credit history or cosigner.
This often leaves immigrants caught in a vicious cycle, unable to qualify for credit and build a credit history. However, there are loan options available for immigrants without a credit history or a cosigner, and this article explores these options in detail.
Problems Facing Immigrants in the U.S. When it Comes to Lending
Immigrants face a unique problem when it comes to qualifying for credit. Lenders assess loan applications by calculating the risk of not recouping the loan, and there are a few factors specifically that lenders focus on that immigrant’s struggle meeting.
No Credit History
Credit history is perhaps the most important factor. Lenders value credit history because it provides a simple metric that they can use to determine your reliability in repaying debt. However, building credit often takes years, and immigrants, by definition, are new in the country and do not have a lengthy credit history. Therefore, lenders will penalize immigrants significantly for not having a credit history.
No Access to Cosigners
Poor credit history or insufficient income can be remedied in a loan application by having a cosigner. A cosigner uses their own funds to guarantee the loan and agrees to pay off the loan if the primary borrower cannot. However, just as immigrants generally do not have a U.S. credit history, they often do not have access to a U.S. cosigner.
The lack of credit history and a cosigner makes immigrant loan applications particularly risky in the eyes of most lenders. In turn, many immigrants are simply denied loans entirely.
What is Credit History?
Credit history is a record of an individual’s history of repaying debts and making payments on time. Typically reflected in a number, called a credit score, credit history is used by lenders and creditors to determine whether or not they should extend credit to someone.
How to Build Credit in the U.S.
A credit score is determined by a number of factors, including the length that you have had accounts open, the amount of available credit you have utilized, the amounts that you owe, and your history of paying bills on time. You can build credit in the U.S. by taking the following steps:
- Make at least the minimum payment on each due date for any debts that you hold
- Keep your credit utilization low; spend as little of your available credit as possible
- Stick with the same bank account/s for as long as possible
- Do not have more than 1 or 2 credit cards
What is a Cosigner?
A cosigner is someone who signs on to a loan in conjunction with a primary borrower, using their finances to guarantee the loan. If the primary borrower cannot meet the minimum eligibility requirements of the loan, a cosigner can apply with them and take over responsibility for repaying the loan if the primary borrower fails.
Where to Find a Cosigner
People typically use close friends or family as a cosigner, so any close relations or friends that you have in the United States are candidates. However, they must have strong enough finances to meet the eligibility requirements of the loan, and their financial history must be in the United States.
There are also websites like cosignerfinder.com that can help you link up with potential cosigners.
Are There Loans for People without Credit History and No Cosigner?
Yes, not all lenders require a credit history or a cosigner. Since these criteria necessarily exclude nearly all immigrants, space has opened up for lenders offering loans using different criteria. Lenders like Stilt consider factors beyond credit history and instead focus on employment prospects, education, skills, and more. This more holistic approach gives an opportunity for immigrants who may not otherwise qualify for a loan.
How to Get a Personal Loan
First, you should investigate different lenders and find their eligibility criteria. Eliminate any lenders that require a certain credit score or a cosigner, until you have a list of lenders whose criteria you can meet. Then, get a quote from each of these lenders for an idea of the interest rate that you would get. Compare the interest rates of different quotes, and submit an application to the lender that offers you the best rate.
How to Get a Personal Loan with Stilt
Stilt is an online lender based in San Francisco, California, which has disbursed millions of dollars in loans to thousands of immigrants. Stilt aims their financial services specifically at immigrants and has crafted eligibility criteria built to include immigrants. Applying with Stilt takes only a couple of minutes, and you will receive a decision on your application within 24 hours.
- Loan Amount: $1,000 to $25,000
- Interest Rate: 7.99%-15.99%
- Max term: 2 years
The options available for a personal loan with no credit and no cosigner are limited. Some lenders are more reputable and reliable than others as well, so make sure that you investigate lenders thoroughly before applying. Find a lender that does not penalize you for prepayment, that offers competitive rates, and a term length that suits your circumstances.