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Navigating the World of Loans for Young Adults with No Credit

As a young adult with no credit, finding a suitable loan can feel like a daunting task. We guide you through the best available lenders and loan options specifically tailored for your situation. Learn about the factors you should consider when searching for loans and the steps you can take to build your credit. Navigate the lending landscape with confidence and secure your financial future.
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Rating by Finanso®

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

(20 Ratings)
Recommended FinScore™

Effective interest rate on the product

up to 35.99%

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up to 60 months
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The Legal Status of Personal Loans in the USA

In the USA, personal loans are legal and typically used for non-business needs. They must be repaid according to the loan agreement, which includes interest and a repayment timeline. Various laws regulate these loans, including the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, and the Truth in Lending. These laws protect both the lender's interests and the borrower's rights, ensuring fairness and transparency in the lending process.

The application process was a breeze, and I received a response within minutes. This straightforward and prompt procedure proved to be a great help to me during a crucial time of need.
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OneMain Financial
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My Funding Choices
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Plain Green Loans
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Advance America
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Navigating the World of Loans for Young Adults with No Credit

What are loans for young adults with no credit?

Loans for young people with no credit are specifically designed to provide financial assistance to individuals who have yet to establish a credit history. These loans can come in different forms, such as personal loans, and are typically offered by unsecured personal loan lenders, credit unions, or other financial institutions. Since young adults may not have a credit score or credit history, these loans often consider other factors like stable income and personal details to determine eligibility criteria.

Without a credit history, young adults may find it challenging to secure traditional loans or credit cards, as a higher credit score means you're financially reliable and less of a risk to lenders. However, loans for young adults with no credit offer an opportunity to start building a credit profile by demonstrating responsible borrowing behavior. These loans may have higher interest rates or require a family member as a co-signer to mitigate the lender's risk.


  1. No credit score requirements. Since young adults with no credit history don't have a credit score, these loans focus more on factors like income and personal details when determining eligibility. This allows individuals with limited or no credit to still qualify for a loan. Note that you may still face a hard or a soft credit check applying for such loans.

  2. Higher interest rates. Due to the higher risk associated with lending to individuals with no credit history, lenders may charge higher interest rates on these loans. It serves as compensation for the increased likelihood of default. It's important for borrowers to compare interest rates from different lenders to find the most competitive rates available.

  3. Limited loan amounts. Initially, young adults with no credit may be offered smaller loan amounts compared to those with established credit histories. Lenders often gradually increase the loan amounts as borrowers demonstrate responsible repayment behavior.

  4. Shorter loan terms. Loans for young adults with no credit may have relatively shorter repayment terms. This allows borrowers to establish a credit history more quickly by successfully repaying the loan within a shorter timeframe.

  5. Co-signer requirement. Some lenders may require a co-signer, typically a family member or close relative with good credit, to provide additional assurance for the loan. The co-signer agrees to be responsible for the loan if the borrower fails to make payments.

Pros and cons


Access to financing. These loans provide an opportunity for young adults with no credit to access money when needed, allowing them to address financial obligations or pursue important goals.

Credit-building potential. By responsibly managing these loans, young adults can establish a credit history and improve their credit scores over time. This can open doors to better loan options and financial opportunities in the future.

Flexible loan amounts and terms. Some lenders offer flexible loan amounts and repayment terms, allowing borrowers to tailor the loan to their specific needs and financial situation.

Opportunity for financial education. Taking out a loan provides an opportunity for young adults to learn about financial responsibility, budgeting, and managing monthly payments effectively.

Potential for competitive interest rates. While interest rates may be higher initially, successfully repaying these loans can demonstrate creditworthiness and potentially lead to better interest rates on future loans.


Higher interest rate. Due to the lack of credit history and increased risk for lenders, these loans often come with higher interest rates compared to loans for individuals with established credit.

Co-signer requirement. Some lenders may require a co-signer with good credit to mitigate the risk of lending to individuals without credit. This places an additional burden on the borrower and their co-signer.

Potential for predatory lending. Young adults must be cautious and avoid predatory lenders who may take advantage of their limited credit history by offering loans with unfavorable terms, excessive fees, or hidden charges.

Risk of overborrowing. Without a credit history, young adults may not fully grasp the long-term implications of borrowing and may be at risk of taking on more debt than they can handle, potentially leading to financial difficulties.

How can young adults with no credit apply for a loan?

Apply for a loan

  1. Establish a steady income. Lenders want assurance that borrowers can repay the loan. Young adults should focus on securing a stable source of income through employment, freelance work, or other means.

  2. Start building a credit history. Although young people may not have a credit history, they can begin building it by opening a credit card specifically designed for individuals with limited or no credit. Making small purchases and paying off the balance monthly can demonstrate responsible credit usage.

  3. Explore credit builder loans. Credit builder loans are specifically designed to help individuals establish or improve credit. These loans typically involve depositing funds into a locked account, and the borrower makes monthly payments toward the loan. Once the loan is repaid, the borrower receives the deposited money, and their credit history improves.

  4. Consider secured loans. Secured loans require collateral, such as a savings account or a valuable asset, to secure the loan. By offering collateral, young adults may increase their chances of approval and obtain more favorable loan terms.

  5. Research lenders that cater to young borrowers. Some lenders specialize in providing loans to young people with limited or no credit history. Research these lenders and consider their eligibility criteria, loan options, and interest rates.

  6. Build a relationship with a credit union. Credit unions are not-for-profit financial institutions that may offer more flexible lending options and favorable terms. Building a relationship with a credit union can provide access to loans and other financial services.

  7. Apply for a loan with a co-signer. Having a co-signer with an established credit history can increase the chances of loan approval. The co-signer becomes equally responsible for the loan repayment if the borrower defaults.

  8. Gather necessary documents and personal details. Lenders typically require documentation such as proof of identity, income verification, and bank statements. Gather these documents in advance to streamline the loan application process.

  9. Compare loan options. Research and compare loan options from different lenders, considering factors such as interest rates, loan terms, and repayment flexibility. This allows young borrowers to choose the loan that best fits their needs and financial situation.

  10. Apply to pre-qualify. Some lenders offer pre-qualification processes that provide an estimate of the loan amount and interest rate the borrower may qualify for. Pre-qualification helps young adults gauge their loan options without undergoing a hard credit inquiry.

Requirements and conditions

  1. Age requirement. Most lenders require borrowers to be at least 18 years old to qualify for a loan. Young people should ensure they meet the minimum age requirement before applying.

  2. Proof of identity. Lenders typically require borrowers to provide valid identification, such as a driver's license, passport, or state ID, to verify their identity.

  3. Income verification. Young people will need to demonstrate their ability to repay the loan by providing proof of income. This may include pay stubs, bank statements, or tax documents, depending on the source of income.

  4. Limited loan options. Young individuals with no credit history may have access to a limited range of loan options. They may need to explore lenders specializing in offering loans to borrowers with no credit or limited credit history.

  5. Co-signer requirement. In some cases, lenders may require a co-signer with good credit to increase the chances of loan approval. The co-signer assumes responsibility for the loan if the borrower fails to repay it.

  6. Lower loan amounts. Initially, young people with no credit may qualify for lower loan amounts until they establish a positive credit history and demonstrate their ability to manage larger loans.

  7. Loan term limitations. Young borrowers with no credit may face restrictions on the length of the loan term. Lenders may offer shorter repayment periods until the borrower establishes a credit history.

  8. Higher scrutiny during the application process. Lenders may closely scrutinize the financial background and personal details of young borrowers with no credit to assess their creditworthiness and repayment potential.

Best places to get loans for young adults with no credit today 28.02.2024

Wells Fargo

Apply for a loan

Wells Fargo offers unsecured personal loans that may be available to young adults with limited credit history.Wells Fargo

Discover Bank

Apply for a loan

Discover Bank provides personal loans and offers options for borrowers with limited or no credit history.Discover Bank

Navy Federal Credit Union

Apply for a loan

Navy Federal Credit Union is a popular credit union that serves members of the military and their families. They may offer loan programs tailored to young borrowers with no credit history.Navy Federal Credit Union


Apply for a loan

Upstart is an online lending platform that considers factors beyond just credit history to determine loan eligibility. They may offer loan options for young adults with poor credit history or low credit scores.Upstart


Apply for a loan

LendingClub is an online peer-to-peer lending platform that connects borrowers with investors. They may consider alternative credit data in addition to traditional credit history when evaluating loan applications.LendingClub

Ways to receive the money

  • Direct deposit to a bank account. Many lenders prefer to deposit the loan funds directly into the borrower's bank account. The borrower will need to provide their bank account details, such as the account number and routing number, to facilitate the transfer. Once the loan is approved, the lender will initiate the direct deposit, and the borrower can access the funds through their bank account.

  • Check or paper draft. Sometimes, the lender may issue the borrower a check or paper draft, especially for smaller loan amounts. The borrower can then deposit or cash the check at their bank or a designated location.

  • Cash disbursement. Certain lenders may provide the loan funds in cash, especially for smaller loans or in-person transactions. The borrower would need to visit a physical location of the lender to receive the cash.

Things to pay attention to

  1. Stable income. Lenders want assurance that borrowers have a stable source of income to repay the loan. Evaluate your income stability and consider whether it meets the lender's expectations.

  2. Credit-builder programs. Some lenders offer credit-builder programs or products specifically designed to help individuals establish or improve their credit history. These programs may have specific terms and features to benefit young borrowers with no or bad credit.

  3. Loan amount. Determine the loan amount you need and check if the lender offers loan amounts that meet your requirements. Some lenders may have minimum or maximum loan limits that may not align with your needs.

  4. Fees and charges. Look for any origination fees, prepayment penalties, or other charges associated with the loan. Consider the impact of these fees on the total cost of borrowing.

  5. Alternative credit considerations. Look for lenders that consider alternative factors in addition to credit histories, such as employment history, educational background, or income potential. These factors can provide a more comprehensive assessment of your creditworthiness.

  6. Loan eligibility criteria. Understand the lender's eligibility criteria. Some lenders may have specific requirements regarding age, income, employment status, or other factors. Ensure that you meet the criteria before applying to increase your chances of approval.

  7. Interest rates. Compare the interest rates offered by different lenders. Higher interest rates can significantly impact the overall cost of the loan. Look for competitive rates that align with your financial situation.

  8. Loan terms. Review the loan terms, including the repayment period and any associated fees or penalties. Ensure that the terms are reasonable and manageable within your budget.

How to repay a loan for young adults?

  1. Understand your loan details. Thoroughly comprehend the terms of your loan, including interest rates, repayment period, and any associated charges. This knowledge will empower you to make informed decisions.

  2. Assess your financial capabilities. Evaluate your income, expenses, and savings to determine a realistic amount you can allocate towards loan repayment each month. Strive to strike a balance that allows you to meet your financial obligations while maintaining a comfortable lifestyle.

  3. Craft a personalized repayment strategy. Develop a repayment plan that aligns with your goals and financial situation. Consider different approaches such as the debt snowball method (paying off smaller debts first) or the debt avalanche method (prioritizing higher interest debts). Choose the strategy that resonates most with your circumstances.

  4. Optimize your spending. Review your budget and identify areas where you can reduce non-essential expenses. This may involve cutting back on discretionary purchases, finding cost-effective alternatives, or negotiating better deals on essential services.

  5. Leverage additional income sources. Explore opportunities to increase your earnings by taking on side jobs, freelancing, or starting a small business. The extra income can be directed towards loan repayment, accelerating your progress.

  6. Automate your payments and track progress. Set up automatic payments to ensure you never miss a due date. Regularly monitor your loan balance and repayment progress to stay motivated and make adjustments as needed.

  7. Consider refinancing or loan consolidation. Assess the possibility of refinancing your loan or consolidating multiple loans into one. This may lead to a more favorable interest rate or simplified repayment terms, potentially saving you money in the long run.

  8. Seek professional advice if needed. If you're struggling to manage your loan or facing financial challenges, don't hesitate to seek guidance from a financial advisor or credit counselor. They can provide personalized advice based on your circumstances.


Apply for a loan

Young people with no credit have several alternative financing options to explore. These options can help them access funds and build their credit history. Consider the following alternatives:

  1. Credit Builder Loan. Credit builder loans are specifically designed to help individuals establish or improve their credit history. With these loans, the borrower makes regular payments over a specified period, and the lender reports the payment history to credit bureaus. Credit builder loans allow young borrowers to build a positive credit history while accessing necessary money.

  2. Secured Loan. Secured loans require collateral, such as a savings account, certificate of deposit (CD), or other assets, to secure the loan. By providing collateral, borrowers with no credit can demonstrate their ability to repay the loan, increasing their chances of approval. Secured loans often come with lower interest rates compared to unsecured loans.

  3. Co-Signed Loan. A co-signed loan involves a creditworthy individual, such as a family member or close friend, agreeing to be equally responsible for the loan. The co-signer's credit history and income provide additional assurance to the lender, increasing the likelihood of loan approval. Co-signed loans can be an effective way for young borrowers to access credit and establish their own credit history.

  4. Microloans. Microloans are small loans typically offered by nonprofit organizations or community development financial institutions (CDFIs). These loans are often designed to support entrepreneurs and small business owners. Microloans can provide an opportunity for young borrowers to access funds for business ventures or educational purposes.

  5. Secured Credit Cards. Secured credit cards are a type of credit card that requires a security deposit as collateral. These cards are designed for individuals with limited or no credit history. By using the secured credit card responsibly and making timely payments, young borrowers can establish a positive credit history over time.

Editorial opinion

Loans for young people with no credit can be both a valuable opportunity and a potential financial risk. On the one hand, these loans provide access to much-needed funds, allowing young individuals to finance essential expenses, invest in education, or pursue personal goals. They offer flexibility in loan amounts, repayment terms, and interest rates, allowing borrowers to tailor the loan to their specific needs and financial situation. However, young borrowers must approach these loans with caution. They may encounter higher interest rates, loan requirements, or stricter eligibility criteria without an established credit history. This can result in increased costs over the loan term and potentially limit their loan options. Young borrowers should diligently research and compare lenders to find the best possible terms, such as lower interest rates, flexible loan amounts, and reasonable repayment terms. Furthermore, it's important for young borrowers to use these loans as an opportunity to build their credit and monthly payment history. Responsible repayment behavior can contribute to improving their credit scores, leading to better loan options and interest rates in the future. Consider utilizing credit builder loans or alternative credit options that report payment history to credit bureaus. It's essential for young borrowers to have a stable income and a clear understanding of their financial situation before taking on a loan. They should carefully evaluate their ability to make monthly payments and avoid taking on excessive debt that could strain their finances. Additionally, borrowers should be aware of the potential risks associated with late payments, which can negatively impact their credit profile and lead to additional fees or penalties. In summary, loans for young people with no credit can be a helpful tool for building credit and achieving financial goals. However, borrowers must exercise caution, thoroughly research lenders, and consider their long-term financial situation before committing to a loan. By approaching these loans responsibly, young individuals can establish a solid credit foundation and pave the way for a healthier financial future.


Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.
  2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.
  3. Carefully review all the terms and conditions of your loan contract.
  4. Thoroughly examine the interest rates and ensure that your contract includes a detailed breakdown of the total cost of the loan.
  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.
  6. Choosing a lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.


At Finanso, we've carried out a comprehensive analysis of over 50 microfinance organizations, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

Additional recources



What loan can I get if I don't have credit?

If you don't have any credit history, loan options are still available. Some common loans for individuals with no credit include:

  1. Secured Loans. These loans require collateral, such as a savings account or a vehicle, which reduces the risk for lenders. Secured loans may offer more favorable terms and lower interest rates than unsecured ones.

  2. Credit Builder Loans. These loans are specifically designed to help individuals build credit. The borrowed amount is usually held in a separate account, and you make regular payments toward the loan. Once the loan is repaid, you receive the funds, and your payment history is reported to credit bureaus, establishing a credit history.

  3. Co-signed Loans. If you have a trusted family member or friend with good credit, they can co-sign the loan with you. The co-signer's credit history provides additional assurance to the lender, increasing your chances of approval.

  4. Payday Alternative Loans. Offered by some credit unions, PALs are small-dollar loans with more flexible credit requirements and lower fees than traditional payday loans. They are designed to be an affordable short-term borrowing option.

Do banks give loans to young adults?

Yes, banks do provide loans to young adults. However, the approval process and loan terms may vary depending on the bank and the specific loan product. Banks typically consider factors such as income, employment stability, fair credit, and credit history when evaluating loan applications.

Can I get a loan without a bank account as a young adult with no credit?

While having a bank account is typically required by most lenders for loan eligibility, some alternative lending options may be available for young adults with no credit or bank account. For example, certain lenders may offer prepaid debit card loans or loans secured against collateral like a car title. However, these options often come with higher interest rates and fees. It is generally recommended to establish a bank account to access a wider range of loan options and manage your finances more effectively.

How can I build credit as a young adult with no credit history?

Building credit as a young adult without a credit history requires consistent and responsible financial habits. Here are some steps you can take:

  1. Open a secured credit card. A secured credit card requires a security deposit but can help you establish credit. Make small purchases and pay your balance in full each month.

  2. Become an authorized user. Ask a family member or close friend with good credit to add you as an authorized user on their credit card. This can help you build credit as their positive payment history is reflected on your credit report.

  3. Apply for a credit builder loan. Credit builder loans are specifically designed to help individuals build credit. These loans require regular payments, and your payment history is reported to credit bureaus, contributing to a positive credit history.

  4. Pay bills on time. Consistently paying your bills, such as rent, utilities, and student loans, on time can help establish a positive payment history, even if these payments are not reported to credit bureaus initially.

  5. Keep credit utilization low. If you have a credit card or line of credit, try to keep within 30% of your credit limit and make at least your minimum monthly payments to maintain the 0% interest offer. This shows lenders that you can manage credit responsibly.

Will applying for a loan as a young adult with no credit history negatively impact my credit score?

Applying for a loan as a young adult with no credit history may temporarily impact your credit score. When you apply for a loan, the lender may perform a hard credit inquiry, which can slightly lower your credit score. However, the impact is typically minimal and short-lived. It's important to note that building credit requires responsible credit usage, so if you are approved for the loan and make timely payments, it can actually help improve your credit score over time. Limiting the number of loan applications you submit and focusing on applying for loans that align with your needs and eligibility criteria is advisable.