Are you a young person looking to get started on your financial future? If you’re looking to get a loan or a line of credit, you’ve probably read about how difficult it can be for young people who have no credit history to get apply for a credit card or find access to a decent loan.
You don’t need to worry too much about the problem, though. While many financial institutions and credit card companies might make it difficult for young people to get access to the money they need because of no credit history, other resources are waiting to help.
Many internet lending platforms offer online installment loans instant approval so that people of any age and with any type of credit history, young people included, have a shot at getting the loan they need.
Why do some companies not want to give young people a chance, though? Don’t they know that most young people fresh out of school probably don’t have a credit history just yet?
Why Can’t Young People Get Credit or a Loan?
You’ve probably read about it online from financial sites or heard about it from your older family members at some point: It’s hard for younger people to get loans or credit cards! This, sadly, is correct in a lot of cases. Why, though, you may be wondering? Why won’t the financial companies and credit card issuers take a chance on young people who just need some money?
The answer is pretty simple, no matter disheartening it may be. The main reason why many businesses won’t give loans or credit cards to people with no credit history is they have no way to verify how trustworthy they are with borrowed money.
You see, your credit score and credit history act as a sort of financial trust rating. A high credit score shows financial companies and credit issuers that you have a great history of paying back what you’ve borrowed. This makes credit card companies and financial institutions far more likely to approve you for credit cards or loans.
If you have a low credit score (or even no credit score at all), on the other hand, many of the financial companies and credit card issuers might not be inclined to work with you. If you have bad credit, it is because your score reflects that you haven’t been able to pay your bills off on time. No score at all shows that you haven’t had any experience in borrowing or credit just yet.
How Can Young People Get a Loan?
If lenders or card issuers won’t work with young people who have no credit, then who will? You’ll be happy to know that you still have options to consider to get the money you need. Consider some of these options if you’re a young person needing money now.
- Look for online installment loans
Many online lenders are willing to work with anyone who has the ability to pay the loan back. Instead of using your credit score to decide if you’re approved or not, they will use your employment status and bank account to decide if you are able to pay the loan back. An online installment loan differs from a payday loan in that you won’t have to worry about paying the whole sum back at one time.
- Use a cosigner
If you’re trying to get a loan for a vehicle or a home of your own, then one option you always have is to try and use a cosigner. A cosigner can be a parent or any other responsible adult you know. It is important to remember never to mess up on payments when you use a cosigner, because if your payments aren’t made, your credit won’t be the only one getting affected. Your cosigner will also see negative remarks on their credit score if you can’t make your payments, so use this only as a last-resort option if you have doubts.
- Try a secured credit card
If you’d prefer a credit card type of setup to a loan, you can always apply for a secured credit card. Instead of getting a line of credit based on your credit score, secured credit cards have a credit limit determined by how much money you put down on them. When you pay the balance on these cards back, your payments are reported to the financial companies and will reflect on your credit score.
You’re Not Out of Options
Don’t feel at a loss if you are a young person struggling with finding a loan. As you can see, you still have options to consider when you need money now. Do all the research you need to do, and when you’re ready, try to look for an installment loan online or use one of the other options available to you. When you start building your credit score up, you’ll see your options expanding more and more.