Most lenders look at borrowers’ credit history to determine the loan terms. A good credit history has a significant impact. A borrower can access an interest-free loan with a good credit history. If the credit score is bad, the interest and the repayment terms can be higher.

One of the things that can affect a credit score is a lack of credit history. Though too much debt is bad, having no record of borrowing and repaying is also bad for the credit score. When looking for a personal loan, there are various ways to get favorable terms if one lacks a credit history.

Consider Lenders Using Non-Traditional Credit Histories

Apart from using traditional credit histories, there are many ways to convince a bank or lender that one is a trustworthy borrower. Some lending companies use alternative data when assessing a borrower’s risk. Some of these methods include checking bank activity history of payment of utilities, bills, and rent.

Borrowers can contact these lenders directly and ask if they can consider alternative data when looking for a personal loan. It can be a bank or a credit union where a borrower can walk in and talk to a bank manager to consider their case.

A lender may ask for a few documents when using alternative credit history. They may need the tax returns for a specific duration, bill payment receipts, and monthly bank statements. The lending company can also request a rent repayment history for up to 24 months. These non-traditional data can help loan companies in the Philippines determine a borrower’s eligibility and trustworthiness.

Consider Alternative Lending Options

Banks and many lending companies consider credit scores when reviewing loan eligibility. One can choose alternative lending options when looking for a personal loan without a credit score.

One of these options is online loans. Online lenders use alternative data and information to assess eligibility and ability to make payments. Some of these include the school a person attended or their income.

Additionally, many employees join credit unions, and some of them offer payday alternative loans. These short-term loans can help borrowers build their credit history when repaid on time. They also have better rates and terms compared to normal payday loans. They rely on the relationship to offer these loans.

A borrower can also get better payment rates depending on their bank history. If one makes regular deposits over time, one can use these data to ask for a loan from the bank.

Look for A Co-signer

Another way to get a personal loan with favorable terms is by getting a credit-worthy co-signer. They can be a family member or friend. When using this option, one has to look for a co-signer with a credit score over 700 to get better rates. If they have a bad credit score, they will affect their ability to get better rates. The loan application can also be declined based on whether they miss payments or have defaulted loans.

Notably, a co-signing agreement can be dangerous for relationships and financial perspectives. The borrower must ensure their ability to make payments on time and fully to avoid affecting the co-signer’s credit history.

Using Collateral

One can acquire secured or unsecured loans. Loan companies in the Philippines are careful when offering unsecured loans. These loans are not tied to any assets. For this reason, a borrower’s credit score is always considered.

However, lenders may be more likely to approve secured loans without checking a borrower’s credit history. If a borrower cannot make payments, the lender can sell the attached assets to recover their money. Some assets include real estate, cars, savings bank accounts, bonds, insurance policies, collectibles, and other valuable collateral.

Notably, the interest rate for these loans is favorable, and some companies can even offer interest-free loans. However, a borrower should be ready to repay their loan in full as they can lose their assets if they fail.

It is also crucial for borrowers to avoid predatory lenders. One of these places is pawn shops and online loan lenders. Some lenders can also offer very high-interest rates as they target the attached assets. When attaching a savings account, a borrower should consider the pros and cons.

Consider Building Credit

Often, many investments that require a lot of money to start are planned over a period of time. For this reason, a borrower can plan months to establish and build a credit story based on their project. One of the ways to build a credit history is to acquire small loans. One of these is a secured credit card. It allows users to charge their cards and make payments on time to improve their credit. A borrower can use the card sparingly, ensuring credit utilization does not dramatically increase.

A borrower can also get added to a family credit card to become an authorized user, which improves the credit score allowing them to access a personal loan.


These options can help a borrower acquire a personal loan with favorable terms. However, they should carefully read through all the terms and conditions of any loans to avoid predatory lending companies.