Without credit history, it can be difficult to get credit. Lenders like to see a track record of responsible borrowing, and if you haven't borrowed money and shown you can pay it back on time, they see you as a potential risk. However, not having any credit history doesn't automatically mean you have bad credit or can't get a loan. In fact, 1 in 10 Canadians don't even have credit history. If you're in this situation, don't worry, we can help.

If you have no credit history or an inactive credit report, there are three things you can do to increase your chances of getting approved for a loan.

How To Get a Loan With No Credit History

Canada's two major credit bureaus, Equifax and TransUnion, only generate credit reports based on a person's activity over the last two years. So, if you have an inactive credit report or no credit history, there are three things you can do to help you get approved for a loan with no credit:

Total Time:

• 2 Hours

What you’ll need:

• Proof of Employment
• Drivers License
• Co-signer (Optional)

Step 1: Organize your documents

You'll need the following documents: employment history and pay stubs, driver's license, and info about your past residences, including how long you lived there. You'll need to show that you have solid job history, pay your bills on time, and have a stable place to live. Lenders will look at your credit history to see if you're good with money. If you don't have any credit history, they'll look at other things to decide if you're a risk. They may also check your bank account to see how you manage your money, which is important for getting approved for a loan.

Step 2: Find a co-signer

If you can get a relative or close friend with good credit to co-sign your loan, you may have a better chance of getting approved. However, keep in mind that your co-signer will be responsible for paying off the debt if you can't, and their credit report will also reflect the loan. It's essential for both of you to understand the risks before going this route. While not an option for everyone, having a co-signer with good credit can be helpful in securing a loan.

Step 3: Improve your credit score

It's never too late to start building your credit history. Having a good credit score proves to lenders that you're responsible with your money. To improve your credit score, consider signing up for a credit card that's designed for people with no credit or bad credit. Make sure you pay your bills on time. You can also work with a lender who specializes in personal loans to help you build your credit. The key is to consistently and responsibly use credit, which will demonstrate to creditors that you're a reliable borrower and increase your chances of getting approved for a loan.

Lenders want to make sure that people they lend money to can manage it responsibly. But don't worry if you don't have a credit history. You can show lenders how you handle your money by providing other documents like bank statements or tax returns. Another option is to ask someone with good credit to co-sign your loan. Or you can start building your credit with a secured credit card or a credit-building personal loan. By taking these steps, you can prove to lenders that you're trustworthy with money.

Three situations that could impact the type of auto loan that you’re approved for:

1. First Time Car Buyers

Getting an auto loan can be difficult for first-time car buyers. Lenders check for both installment and revolving credit on your credit report.

• Installment credit, like an auto loan or student loan, cannot be spent again once paid off.
• Revolving credit on the other hand, like a credit card, can be used again once you pay off the monthly balance.

To have a healthy credit mix, it's ideal to have both installment and revolving credit. However, if you're a first-time car buyer, you may not have the necessary credit mix to show creditors that you have experience with different types of loans.

This can affect your approval for a car loan and the interest rates and fees associated with it. Applying with a bank, which usually has stricter policies for approving people with no or poor credit history, can make it harder to get approved.

If you want to make it easier for yourself, Approval Genie's team of experienced Finance Advisors can help take all the guesswork out of applying for your car loan. They can help you get approved for a great vehicle at a great price, even if it's your first time buying a car.

2. No Credit

If you're new to Canada or Canadian credit bureaus, or haven't built up your credit yet, getting a car loan can be daunting. Look for lenders who specialize in helping people with little or no credit. It's common for people to wait until they're older before applying for a loan.

To impress the lender as a first-time car buyer with no credit history, prepare all your necessary documents, such as your employment history, a letter from your landlord, or utility receipts. These documents show that you are responsible and can make timely payments to start building your credit.

Another way to increase your chances of getting approved for a car loan with no credit is to apply with a cosigner. A cosigner can provide a safety net for the lender in case you default on your loan.

Make sure that the car loan you apply for fits your budget and lifestyle. This way, you can make timely payments and start building your credit history.

3. Bad Credit

Not everyone has a perfect credit score. According to Borrowell, around 20 percent of Canadians have a credit score between 670 and 710. If you've experienced bankruptcy or made a consumer proposal in the past, your credit score could drop below 520. However, lenders don't only look at credit scores when assessing car loan applications, and it's always possible to start rebuilding your credit.

Use our quick and easy credit tool to check your credit score for FREE with what's known as a "soft check", with no impact to your credit:

If you're planning to buy a car and are concerned about your credit score, it's a good idea to check your credit report before applying for a loan. You can get a free copy of your FREE credit report from Borrowell. You can also use apps like Credit Karma to keep track of your credit habits as they improve. This will help you understand the factors affecting your credit score, and you can make better financial decisions in the future to improve your chances of getting approved for a car loan with better interest rates.

Where can you get a car loan with no credit?

If you don't have any credit history or have a bad credit score, you can still get a car loan today. Approval Genie understands that everyone's financial situation is different. We consider more than just your credit score and can help you get approved for great vehicle financing options.

If you're shopping for a car and have no credit (or bad credit), you can get pre-approved for free today to find out what your car loan options are.