Getting a loan can be tough for anyone, but if you don’t have a credit score, it may feel impossible. Most financial institutions are wary of lending money to someone who can’t prove that they can pay off their debts. But that doesn’t mean you can’t get a loan at 18, even with no personal credit history.
The first step to start building credit is to understand what credit is and then learn which options are available to you. After that, you just have to choose the option that best suits your needs.
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Where can I find a loan at 18 with no credit history?
Before you establish credit, it’s important to get your finances on track. For only $1 per month, a MoneyLion RoarMoneySM account gives you access to all the tools you’ll need, including cashback rewards, early direct deposits, and weekly spend reports to help you budget.
Once you have a good grip on your finances, you can start shopping around for lenders based on your financial needs and credit score. Most people who are just starting out have a hard time getting a loan at 18 with no credit. But by considering the options below–and staying away from predatory lenders–you’ll already be off to a great start.
1. Secured credit card
Secured credits cards are a type of revolving credit that you fund in advance. This is a popular option for those with short or poor credit histories.
Getting a secured credit card is simple. When you open an account, you put down a deposit – say $500. The lender sets a credit limit close to the amount you deposit.
Then, you’ll use your card to pay it off every month, which builds your credit over time. If you default, the lender can seize your deposit to cover their losses.
2. Credit builder loan
Another way to get a loan with insufficient credit history is to take out a credit builder loan. Credit builder loans are usually for small amounts under $1,000.
The money you borrow is put aside into a secured savings account while you pay off the loan, and then you receive the funds after it is fully paid. And while you’re making payments, the lender reports your payment activity to the three major credit bureaus.
The MoneyLion Credit Builder Plus membership is available if you want to get a loan at 18. For only $19.99 per month, not only can you access competitive-rate installment loans up to $1,000 but you’ll also get:
- Instant approval when eligible
- Monthly reporting to the three major credit bureaus to establish credit in 60 days
- Credit-monitoring tools with weekly information updates
- 0% APR cash advances
3. Savings-secured loan
A savings-secured loan uses funds in an interest-bearing account—such as a savings account or a money market account—as collateral against the debt. If you default, the issuing bank can repossess your savings.
Because the loan is often secured by an account with the lender, you might not even need to pass a credit check to qualify!
4. Personal loan with a cosigner
Taking out personal loans with a cosigner is another way to establish credit at 18.
When you apply for a personal loan with a co-signer, the lender considers the cosigner’s credit score and annual income, as well as the borrower’s score and income. This can raise approval odds and lower the interest rate for first-time borrowers as well as borrowers with poor credit.
5. Small personal loan
If you already have an account with a local bank or credit union, you may be able to take out a personal loan to start building credit. A long-running history of being responsible with your money could help you qualify for a small, short-term loan.
6. Peer-to-Peer loan
Peer-to-peer lending is exactly what it sounds like! One person borrows money from another person. The process cuts out traditional lending institutions, which can lower interest rates and speed up application times.
Peer-to-peer lending offers borrowers a way to shop around for online loans without having to accept a hard credit check. They also offer individuals with poor or no credit an opportunity to potentially qualify for larger loans.
7. Instacash advance
InstacashSM is another way to get online money loans with no hard credit check. With a RoarMoney account set up for a direct deposit, you can access up to $250 in just minutes with no interest, no monthly fee, and no impact on your credit!
How easy is that?
8. Federal student loan
Federal student loans do not require a credit history to qualify, and they come with several benefits including fixed interest rates, income-driven repayment plans, and the potential for loan forgiveness. Plus, they help build your credit, too–all while helping you pay for your education.
High-risk loans you should avoid
Often, young adults whose financial journeys are just beginning can be easily swayed by predatory lending tactics. Even if you’re strapped for cash or in a financial emergency, you should avoid these types of loans at all costs.
Payday lenders
Payday lenders offer small, short-term loans for emergencies and sudden expenses.
The catch? Payday loans usually come with:
- Very short-term repayment dates within a month or less
- Interest rates as high as 400% annually
- High fees and unclear service charges
- “Rollover” options where you only pay the interest for the month while more interest accrues
Title loans
Title loans require an asset–usually your car–as collateral for your debt. While they’re attractive due to their higher loan amounts of $1,000 or more, they also come with annual percentage rates up to 300%. The lender can also repossess your car if you default on the loan.
Private student loans
Private student loans are for students who want to pay for their education without federal assistance. However, they require a good credit score to qualify, and they’re ineligible for federal protections, such as loan forgiveness or income-driven repayment.
Credit card cash advance
A credit card cash advance isn’t a loan. It’s money you borrow from your credit card. While an advance is easy to draw, it comes with high-interest rates that kick in as soon as you pull the money.
Build credit and your empire
Now that you know how to get a loan at 18 with no personal credit history, you can take the reins of your financial future. Get started young with a fully-managed investment account for $1 per month, no matter how much you invest. Whether you contribute $5 or $500, you can watch your money grow in a personalized portfolio without any high asset-based management fees.
