How to Get Loans for Young People with No Credit History
When you've not borrowed money previously, lenders have no way of assessing how likely you are to default on the terms of the agreement. When this is coupled with a youth and inexperience, the likely outcome of your application is a decline. However, there are steps that you can take to improve your creditworthiness.
In most instances, unsecured personal loans for young people with no credit history should not be applied for straight away. It's advisable to submit your application until you've spent a minimum of 6 months building your credit rating. It's so much better to give the lender some history to assess.
Guaranteed Ways for Teens to Borrow Money with No Past Credit History
Pawnbrokers: Provided that you're able to provide an item of value to support your application, such as gold or silver, not having a credit history isn't an obstacle to getting approval. You can apply for a pawn shop loan online or by going into a local shop. If you don't repay the debt and interest, your collateral will be lost.
Payday company: If you're looking to borrow up to a $1,000 on an unsecured basis for a month, a payday lender may be able to assist you. You'll need to have a full-time job, identification and your own checking account, but you won't be subjected to any credit scoring. Although unsecured, interest and charges are extremely high.
Other Types of Loans for Young People with No Credit History
Family loans: If you're looking to avoid the payment of interest, you should consider asking a close family member if they're prepared to assist you. Remember that, if you don't pay back the money you've borrowed, they're very unlikely to help you again in the future. Non-payment could also lead to family tension.
Buy now pay later stores: These are regularly used to purchase electrical and white goods, so why not enter a credit agreement with a weekly payment store? You can then spread the repayments over the next few years to improve affordability. The price of goods is higher, but interest rates are more favorable.
Doorstep companies: If you need to borrow £500 and spread the repayments over up to a year, a doorstep cash loan could be the ideal solution. The money will be sent directly to your bank account, but payment will be collected from you on a weekly basis by your local agent. The longer the duration of a cash advance, the more interest will accrue.
Guarantor Unsecured Personal Loans for 18 Year Olds & Older
Loans with no credit history aren't a problem "if" you can get a close friend or relative to act as a guarantor. This means that, if you default on the terms of the agreement, they'll become responsible for the repayment of the debt. Your guarantor should have a good credit score as they'll need to pass a credit check.
Provided that you make your monthly payments on loans for young people in accordance with the terms and conditions specified in the credit agreement, your credit score will start to get better. You should avoid borrowing too much money as being over-burdened with debt relative to your income is one of the most common causes of default.
Use No Credit History Credit Cards to Get Approval for Loans for Teenagers
Although the precise Fair Isaac formula is unknown, we do know that you should be making repayment towards forms of both installment (loans, car finance etc) and revolving credit (store and charge cards). If you don't yet have a charge card, consider signing up for a credit-building credit card as the issuers report to all three credit reference agencies.
All unsecured and secured credit cards report to Experian, Equifax and TransUnion. However, unless the credit builder symbol is displayed, this isn't the case with pre-paid cards. After making 6 to 12 timely monthly repayments, applying for loans for young people with no credit history will no longer be an issue.