Being a stay-at-home parent with no income can make it a little hard to get a personal loan. If your credit is better than your spouse’s, you might be thinking that it would make sense to try to take out a personal loan in your name.
But wait, if you don’t have any income, is it possible to get a personal loan in your name? It is possible, but there are some very strict requirements to do so.
Let’s take a look at how you can get a personal loan without having your own income.
Can You Qualify for a Loan Without an Income?
If you don’t have a way of providing proof of income because you don’t have any, there is another way that you can prove to a bank that you do have money. For one example, if you receive recurring dividend payments, this would count as income on a loan application.
But your spouse works, so they can just use their income, right? Well, technically. However, your spouse will need to be listed as a cosigner on the loan to be able to use their income. This may not be ideal if the reason you are trying to get a loan is that your spouse doesn’t have the best credit.
If you are not receiving any personal income due to your own choice, you may still be able to find a bank that will be willing to extend a loan to you as long as you meet some specific requirements. What are those requirements? Let’s see.
Requirements for a Loan with No Income
If you do not have job income, but you still have money going into your bank account, you may still be able to convince a lender to provide you with a loan.
All you need to do is prove to them that you have a history of making payments on time. To be more specific, lenders will look at your credit history, credit score, and the money that is regularly deposited into your bank account.
If your credit report shows a strong history of payments made on time, especially in recent years, this can reassure lenders that you know how to manage debt responsibly and can make payments on time. Lenders will also like to see the absence of negative marks, such as a foreclosure or bankruptcy.
Lenders will usually have a minimum credit score that you need to meet to be approved for a loan. They will also reserve their lowest interest rate loans for those who have a credit rating that is in the very good or exceptional range.
Your credit score is calculated based on your credit history. If you have a sparkling history, then your credit score will have a very solid chance of being in those high ranges.
Before you apply for a loan, you should be aware of what your credit score looks like. If you think it could use a quick lift, try paying down some credit card balances so they are below 30%. This is a quick and easy way to boost your credit score and history—read more here.
Lenders want to be sure that you will be able to make a loan payment on time every month. The deposits don’t necessarily have to be from your paycheck (your spouse’s income will come in handy here), they just want to see that you have reliable money coming in that is a sufficient amount to cover your current monthly expenses and your new loan payment.
Instead of regular deposits, you may be able to acquire a loan if you can prove that you have access to a significant supply of money now or later.
This can be from a savings account, but lenders will also typically accept a pending job offer or contract for freelance work, a pending sale of real estate or other securities, or proof of an upcoming inheritance.
Things to Consider
No matter what your employment status is, you need to be real with yourself about your ability to make the loan payments on time. If you miss just one payment, it can cause massive damage to your credit report.
If you stop making payments completely, that will create a hole in your credit report that you won’t be able to fix. If you have even the slightest doubt about being able to repay the loan as agreed, it will be best to pass on that option for now.
You should also consider the fact that the lender can make changes to your loan request if they see your lack of personal income as a risk. They may also require that you accept a shorter loan period than what you originally hoped for.
Your lender may require you to set up automatic, recurring payments so they know your payments will always be on time. In addition to that, some lenders may require that you pay origination fees to cover the costs of trying to get a payment from you should you default.
Where to Get a Personal Loan
A personal loan is desirable because it usually doesn’t require any kind of security deposit for you to receive the money. One place to start searching for a personal loan is the bank where you have your personal accounts.
They will be able to access all of your bank records and determine if they think you are a good fit for loan approval. It will also work well in your favor if you have a long history at that bank, as your relationship will give you a leg up in the decision-making process.
You can also consider applying for a loan with a local credit union. A credit union will have extremely competitive interest rates and might also have lower credit requirements than a traditional bank.
If you are offered a loan with a credit union, you will be required to become a member before they can completely process your application. You will usually need to pay a small amount of money to become a member, but it will be worth it to be provided with an excellent loan.
You can also try searching online financial institutions such as a peer-to-peer lending website. These websites will usually provide you with a quick decision, and it is easy to submit more than one loan application at the same time.
You can also try searching for online loan matching services. These websites will be able to point you in the direction of a loan website that will more than likely be able to approve you based on the information you provided on the website.
What If My Spouse and I Both Have Bad Credit?
Even if you and your spouse both have bad credit, you might still be able to qualify for a loan. You will need to be persistent and make it clear that you are willing to accept a higher interest rate if the lender is willing to approve you.
If it is not important for you to have a personal loan right this second, you can improve your score within a few months. If you try to improve your score, you will be more likely to be offered a loan in a couple of months that has the terms you are asking for.
What If I Don’t Qualify?
Needing a loan and being denied for one can be incredibly stressful. If you don’t qualify for a traditional loan, but you really need money right now, you still have a few options.
Find a Cosigner
Ask a family member if they would be willing to help you out by cosigning for a loan. The family member would need to have a great credit score and proof of regular income to help you qualify.
It can be hard to find someone who will agree to be a cosigner because if you miss one payment, it will not only just mess up your credit, but your cosigner’s as well.
Home Equity Line of Credit
If you and your spouse own your home and have for a while, you might be eligible for a home equity line of credit. You may be able to qualify for this line of credit if the value of your home is more than what you currently owe on it.
Car Title Loan
If you own your car and do not owe any outstanding payments on it, you can use the title as collateral for a loan. However, if you miss one single payment on the title loan, the lender has every right to repossess your car.
If you have a credit card, the company will likely allow you to get a cash advance from a bank or an ATM. The interest rate on a cash advance is significantly higher than normal credit card purchases, so keep this in mind before trying this out,
If you own something of value that you don’t need anymore, you can sell it online through a marketplace. Chances are your item will sell pretty quickly. If your item doesn’t sell quickly, you can pawn or sell your item to a local pawn shop and they will give you cash on the spot.
If the item is important to you, you should consider pawning the item instead of selling it. If you pawn an item, you will be taking a short-term loan from the pawnshop that you will be required to pay back before you can get your item back.
You can also sell your items to the pawnshop. This is a great idea if you do not have any sentimental feelings for the item and you are looking for a quick way to get some cash.
If you do not work, but your spouse does, it may feel like you are constantly in a rut when it comes to money. If you find yourself needing a personal loan, you may have been Googling for hours trying to find out if you can get a personal loan (because your credit is better) without having an income stream of your own,
The answer to this question is yes, but you will have to jump through several more hoops than you would if you did have a job income. You will need to prove to the lender that you can make consistent monthly payments. The lender will usually require that you have a sparkling credit history, They want to be sure that they are lending their money to someone responsible for their debt and payments.