How to Get a Loan Without a Guarantor

Do you need a loan? Likely, lending companies will require you to have guarantor especially if you are borrowing for the first time or have a poor credit score. A guarantor is someone who promises to pay your debt in case you fail to do so.

Finding a guarantor may not be very easy, right? It could be that you need the money right away. Or maybe, you just do not have anyone with a good credit history willing to sign for you. Because of the risks involved, a lot of people nowadays avoid becoming a guarantor even for their own families or friends.

Nevertheless, it is not impossible to get a loan with no guarantor. Here are some ways to increase your chances:

1. You need to know your credit score.

Since no one is guaranteeing for you, your credit score is an important factor. Your credit score reflects whether you are a responsible borrower and that you have the ability to repay. Your payment history, the types of credit that you have (credit cards, car loans, student loans, housing loans, etc) and your debt balance are taken into consideration. The higher your score, the more likely lenders will trust you.

To know your score, you may apply for your credit report from credit bureaus. Check if there are any inaccuracies. You should address issues that may affect your chances to get loans. You can streamline your search for lenders based on your credit score.

2. Look for a no-guarantor loan.

There are a lot of institutions which may let you borrow money without a guarantor. You may apply online—it is much faster with just a few clicks on your computer. Directly approaching banks or other lending companies is another option. Look into their eligibility criteria.

You need to check which one is suitable for your needs by comparing multiple providers. Check interest rates carefully. No-guarantor loans are riskier for lenders, thus, they may impose higher interest rates. Assess if you will be able to repay the debt based on their conditions.

3. Assess your ability to repay the loan.

How will you pay the loan? This will affect how much you can borrow and other payment terms. Lenders will have to know if you have a stable source of income. Income could come from employment wages, social security or pension payments, child support, etc. You may also have to show that you have assets that can be used as collaterals. Be prepared to submit documentation of these. Aside from your credit score, these will prove that you have a good financial standing.

4. Build your credit history.

Continue working towards a good credit standing as this will help get your loans approved. Keep payments for your bills, credit card and loans up to date. As much as you can, pay more than the minimum amount due. Another way is to keep your credit limit balanced. Avoid maxing out your credit cards. Apply for loans only when necessary. Bear in mind that your credit activities will affect the necessity of getting a guarantor.