When you’re young, establishing credit is essential.
The problem is, you have to find someone willing to extend credit your way even though you have no established history. And with credit history comprising 15% of your score, you may discover that raising that number is a long process.
I know firsthand how frustrating it can be to know that you’re doing what you’re supposed to – trying to obtain credit – but you have no options beyond high-interest credit cards. I chose to take out one of these cards in my early twenties because I thought it was the best I could do, and for a few years, I struggled to make regular payments above the minimum amount because of that horrid interest rate. Sure, I established a credit history, but I also carried a balance and sometimes had trouble with payments altogether, both of which worked against my credit score, trapping me in a world of high-interest and stress.
The good news is that because of this problem, alternative lenders are cropping up with offerings designed to help you get a personal loan, even with no credit. Online banks and other lenders have come up with innovative ways to help anyone get a personal loan, even those with bad credit. If you’re interested in learning how to get loans with less-than-stellar credit, you’re in the right place.
Read more: Best Personal Loan Choices for 2019
Find And Compare Personal Loan Options
If you are in need of some funds and are hoping to build your credit profile, a personal loan can help. However, you’ll need to do your research to find programs that are meant for borrowers like you, young people with poor or no credit.
Personal Loans: Range from $1000 to $50,000
Once you identify some potential lenders, get estimates for loans you qualify for before committing to one. At this stage, look for lenders that will do a soft pull on your credit for your application, meaning that their inquiry won’t hurt your credit score.
After that, compare your options to find the best rate and terms for your long-term success.
Choose Your Terms Wisely
While a personal loan will help you access cash now, you don’t want to burden your future because of sky-high interest rates and the wrong terms. Some of the traps it’s easy to fall into include:
- Taking a loan out with an interest rate that doubles (or worse) the amount of money you’ll be paying over the life of the loan.
- Choosing an extended-term loan means more accumulated interest in the long run, even if your monthly payments are lower.
- Only considering the interest rate and not the APR, which will reflect the actual cost of your loan, including your interest rate and applicable fees.
- Ignoring fees, particularly when interest rates seem too good to be true.
Pull Together All Relevant Information
If you’re young, you may not have an established credit or banking history, which means you want to find alternative ways to present yourself in the best light to lenders. Save your pay stubs so you can factor out your total annual income, and be prepared to give additional information, like your education, to show lenders that you are trustworthy and have a bright future.
Check Out The Top Personal Lenders For Young Borrowers
One of the ways young people often find themselves accessing money quickly is through pay-day loans, but these schemes often prey on borrowers with rates upwards of 300%. If you want to know how to get loans that won’t end up adding more stress to your life, it’s time to take a look at online lenders.
Upstart is one of the most innovative new lenders out there, using a peer-to-peer lending process rather than traditional lending structures. What makes Upstart so helpful for young people is that rather than relying on conventional application processes, Upstart will take into account factors like your education and life experience.
To get started, you can see what loan terms and rates you qualify for with some personal information. From there, if you decide to open a loan, you can get your money as quickly as the next day. Take a loan up to $50,000, and expect rates to range between 7.73-29.99%.
LendingClub is another peer-to-peer lending network that favors borrowers by allowing them to qualify with lower-than-average requirements. LendingClub offers access to personal loans as well as business loans, auto refinances, and even medical costs. Your interest rate will be dependent on your qualifying information but expect APRs between 5.98% and 35.89%, which includes a 1-6% origination fee withdrawn from your funds when they are issued. You can make extra payments on your loan whenever you want as there is no prepayment penalty.
Young borrowers often tend to have a not so perfect credit score, if you under the same category then Lendvious is a good option for you. Lendvious start its APR rate as low as 4.99% and loan are available between $1000 – $50,000.
Lendvious is also another loan marketplace with connects you with multiple offers and offer loan for any reason. With its simple and easy process, you can even check your credit score which will have no impact on your credit report.
If you find that your lack of credit or low score is preventing you from qualifying for personal loans, consider opploans, which bills itself as an alternative to predatory payday lenders. Opploans is ideal for those in need of a loan who also have to build their credit, as it offers terms up to 36 months, APRs between 99-199%, and loan amounts up to $4,000.
Prosper Loan is a loan marketplace rather than the traditional way. With APR starting from as low as 6.95% it becomes a good option for borrowers with no experience with loans. Another advantage to young borrowers who are still on the question – how to get a personal loan? Because of the availability of different loan offers.
A borrower with an average credit score is best suited for the loan with no prepayment fees and you can borrow fund between the range, $2000- $40,000 with a payment window 3-5 years. Just keep in mind that your debt – to – income ratio should be below 50%
Avant issues loans between $2,000 and $35,000, with APRs of 9.95%-35.99%. Expect an administration fee of 4.75%, and terms up to 60 months, but there are no prepayment fees. Your credit won’t be hurt if you check out your possible loan terms through Avant, and your funds could be available as soon as the next business day.
A personal loan can be a great way to access additional cash when you need it while building your credit history. However, as with any loan, it’s vital that you come up with a strategy to repay it as quickly as possible, or you’ll end up spending much more over the life of the loan. Remember: borrow responsibly, spend responsibly, and your finances – and credit – will grow.