When you’re young and just starting your journey into adulthood, some extra pocket change can make a world of difference. Maybe you need to finance your first car, furnish your dorm room, or launch yourself on the backpacking trip of a lifetime. Whatever the reason, a loan is a great way to put some much-needed cash in your bank account. 

The big challenge for most young people in this situation is their lack of a credit history. Traditional lenders, such as banks and credit unions, use an applicant’s credit rating to decide whether a loan application is approved or rejected. And in many cases, no credit is just as much of a barrier as poor credit

However, that doesn’t mean you can’t get a loan if you have no credit—far from it. 

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Loan options for Canadians with no credit 

Times have changed. Banks and credit unions aren’t the only places for loan seekers anymore. Now you can search the internet and find plenty of online lenders who cater to those with no credit in a matter of minutes. Leveraging advanced analytics that go beyond credit scores, online lenders can calculate your ability to repay the loan by looking at factors such as your income.

Be careful, though. Before you sign on any digital dotted line, make sure you know the terms of your loan and fully understand the risks. Not all loans (or lenders) are created equal. 

Here’s a look at the differences between two common types of loans for Canadians with no credit: Payday loans vs. personal loans. 

i. Payday Loans 

Payday loans are a popular—but extremely risky—option for those with no credit or poor credit. Applications are simple and approvals don’t require a credit check. You can have cash in hand or your bank account within minutes or hours. 

However, payday loans are also dangerous and predatory. They have extremely high interest rates and ultra-short repayment deadlines, usually just one or two weeks. With payday loans, it’s easy for your finances to spiral out of control in no time at all. 

Fortunately, safer options exist. Even for those with no credit. Unless you like playing with fire, payday loans should be avoided at all costs. 

ii. Personal Loans 

Many reputable lenders offer personal loans to those with no credit history. These types of installment loans offer extended repayment periods, so you can make equal payments over months rather than weeks, as well as more reasonable interest rates than payday loans.

Unlike payday loans, personal installment loans can also help you build credit (provided you don’t miss your payments), making them a great option for anyone with no credit. 

Getting approved for a personal loan from a reputable online lender is also quicker and easier than applying for a loan with a traditional lender, such as a bank or credit union. You can apply entirely online, be approved in a matter of hours, and usually see the cash in your bank account the same day—all without having to leave home. 

How to get approved for a personal loan with no credit 

Getting approved for a personal loan even if you have no credit is relatively simple. The entire process can be done online at your own convenience. 

1. Check your credit score for free online 

Even if you think you have no credit history, it doesn’t hurt to check. You can check your credit score for free online to see exactly where you stand. Once you establish credit, this is a helpful tool for monitoring your credit score regularly to ensure it's on the up and up. 

Read more: How To Check Your Credit Score For Free In Canada

2. Find a reputable lender that can help

Not all lenders are created equal. If you have no credit history look for a lender that specializes in no credit installment loans. Before you choose a lender, shop around and compare interest rates, loan amounts, fees, and terms. 

3. Show your income

As part of your loan application, you’ll be asked to show your income. Generally speaking, a monthly income of at least $1200 can get you approved with most online lenders. If you receive any supplementary income or support from the government this should be included in your income as well. 

To put your income requirements into perspective, here’s a breakdown:

Weekly Income:

At least $285 per week (before deductions)

Bi-weekly Income:

At least $570 every two weeks (before deductions)

Monthly Income:

At least $1200 per month (before deductions)

4. Can you ask a cosigner?

If you’re below the $1200 threshold, you might need a cosigner to help you get approved for the amount you’re seeking. A cosigner should be someone you trust who is willing to help. In turn, it’s important you don’t abuse your cosigner’s trust by not repaying the loan or frequently missing payments, as this will impact your cosigner’s credit.

Get approved & funded today with Fresh Start Finance 

If you need a loan but have no credit history, consider Fresh Start Finance. Unlike predatory payday lenders, Fresh Start Finance offers better interest rates, flexible payment plans, and no hidden fees. 

Discover the Fresh Start Finance difference: 

  • No credit? No problem: We specialize in helping Canadians with no credit and poor credit get approved. 
  • Personal loans of up to $15,000: Whatever your financial need, get your personal installment loan amount e-transferred fast. 
  • Build credit with your loan: The silver lining with our loans? They help you build credit with every on-time payment you make. 
  • Open-ended loans: You can pay the loan off whenever you want, which means you decide how much interest you pay. 
  • Trusted online lender: Canadians from coast to coast have trusted Fresh Start Finance for years, see what they say about us on Trustpilot and Feefo

Apply for your personal loan today and start building credit!