There could be multiple reasons why a person does not have a solid credit history. You may be young and just started earning, so did not get to build credit. Or you have not opted for a credit card; hence there is no trace of your spending.
However, not having any credit does not imply that you are a financially unreliable person. In fact, having no credit is relatively better than having bad credit. But, when you have to apply for loans, your Credit score is given a review.
Here are 5 simple ways in which you can get no credit loans without any hassles.
How to get no credit check loans Canada
Five strategies are useful when it comes to getting no credit loans. Let us have a quick look at them.
Look for lenders
You will find that many lenders are willing to provide you with loans even without a credit history. These lenders use alternative information to find out your financial situation. This includes your bank account activity and the payments you make for utility bills. If you have been regular in providing the payments, there is no chance they will reject your loan.
To get approved, you will have to contact the lender directly. Or you could search for information like “Find no credit check loan in Canada.” The results may vary, and to get a responsible service provider, you should check their online reviews.
Also, make sure that you have all the documents that are required to get a loan issued. Even the most reliable companies do not want to falter on the paperwork; hence being careful is suggested.
Apply for payday alternative loan
Many people use Payday loans to meet small-time expenses. There can be multiple reasons for the same. Emergency requirements are just one of them. However, these loans are unsecured, and you can get them for one to six months’ duration. The borrowed amount can range from $200 to $1200.
But, again, these loans are only for immediate requirements. Moreover, you cannot get a payday loan unless you are a member of any credit union. You should technically be a part of a credit union for at least one month. If the same is not applicable, you may not be able to avail of the facility of these loans.
Also, payday loans may have exceedingly high-interest rates. Though there is a cap on the interest that can be charged, you will have problems coping with the payments. If your financial situation is in dire straits, you will not want to spend any extra money.
Using a collateral
You can also take unsecured loans provided you have collateral to offer. Most lenders tend to offer loans only if you have a strong credit history. This is done as they wish to save themselves from any kind of non- payment of dues.
The requirement can change if you have something in collateral to offer. Some of the assets that are commonly used as collateral are:
- Any kind of property like land or house
- Bank accounts
- Stocks, mutual funds, and bonds
- Insurance policies
- Gold, silver, and precious metals
Apart from not paying attention to credit, these collateral loans may offer better interest terms. However, do not forget that you will lose the item in case you miss any of the payments. Make sure that you have analyzed all these factors before you apply for the loan. Also, steer away from the loan sharks who charge substantial interest rates despite keeping items as collateral.
Borrow from 401 (k)
In case you do not have cash and need quick access, you could take loans against your 401 (k). However, doing that does have its share of pros and cons. The advantage is that you may not have to deal with any lender in this whole process. With this loan, you are borrowing money from yourself; hence the interest comes to you only.
This makes a 401(k) loan a better option than many others. However, you should know that if you are unable to pay by the due date, there will be repercussions. You have to pay a 10% penalty and taxes on the funds that you have withdrawn.
Plus, if you leave the job, the entire loan stares at you. The payment should be made in full and that too by the due date of your next tax return.
This situation can be quite complicated, and if you wish to avoid it, you may ignore this option. Moreover, if the job scenario for you is not stable, borrowing from 401 (k) can be a disturbing proposition. Opt for it only when you are sure that you can suitably repay back the amount taken.
Adding a co-signer
Another way of getting a loan without the credit is to add a co-signer to your application. You can ask your family member to join. Again, remember that the co-signers credit will get damaged if you do not make the payments on time.
Therefore adding a co-signer can have a damaging effect both from financial as well as personal aspects. The only way to do this correctly is to ensure that you are always in a position to make your payments. Any delay in the same can have long term effects that you would not be able to counter.
If you are looking for a loan and credit is the issue, you can use the above five steps to bring things in place. You could also wait for the time when your credit is built up sufficiently. This, however, is a long-term process and may not be worth waiting for.
Always look for a reputed company that can provide you the loan with some necessary formalities in place. Ensure not to conceal any information from them as that could cause further damage to your financial reputation.
Also, be prompt in the payment of dues so you can hope to receive more help in the future if required. Research the details of the company before signing up, so you do not feel cheated later on.