Securing a loan as a young adult in the United States can be challenging, especially if you have zero credit history. Lenders often hesitate to approve first-time borrowers due to the lack of a proven track record, leaving many 17- to 20-year-olds feeling stuck. Let me tell you how to navigate the credit system, find the best loan options, and set yourself up for early financial success in adulthood.
Getting a loan as a young adult, even with little to no credit history, is entirely possible if you understand the basics of credit, explore the right kinds of loans, and proceed methodically. Start by recognizing your budget, building a basic credit history (even if it’s small), comparing different lenders, and considering a co-signer if needed. Always read the fine print, avoid predatory lenders, and aim to establish a positive credit track record early on.

How I Navigated Loans in My 20s
When I was fresh out of college at 20, I found myself in a predicament: I needed a personal loan to handle a few urgent expenses, but I had virtually no credit score. At that time, all the financial jargon, from “APR” to “debt-to-income ratio”, felt overwhelming. Getting a first-time loan with no credit history seemed really intimidating. Fast forward a few years, though, and I’ve managed to build a decent credit score and learn the ropes of the U.S. lending system.
I want to share everything I’ve discovered about loans for young people. Maybe you’ve wondered how to get a loan at 17 or you’re already 18 or more and looking for practical advice, I’ll try to get you covered. We’ll also discuss strategies for building your credit, so you can apply for bigger and better loans.
Why Young Americans Struggle to Get a Loan
Many young Americans find that securing their first loan is no small feat. If you’re between 17 and 20, you might wonder why some financial institutions seem so hesitant to lend you even a modest sum. So, there are a few obvious reasons:
- Lack of credit history. In the United States, lenders rely heavily on credit reports generated by bureaus named Equifax, Experian, and TransUnion. If you haven’t had a credit card or a loan in your name, there’s simply no track record showing you can pay back borrowed money. To a lender, that’s a big risk.
- Limited or no income. At this stage of life, many people are juggling school, part-time jobs, or internships. If your monthly income is unpredictable or minimal, lenders might doubt your ability to keep up with payments.
- High Debt-to-income ratio. College tuition costs in the U.S. have soared, and if you’re saddled with student loans or other debts without a stable income, banks will see a red flag. A high debt-to-income ratio indicates you may already be stretched thin financially.
- Short Work History. Many lenders prefer applicants who have been in their current job for at least a year. If you’ve just started a new position or are in gig-based work, your short job history might lead to a loan denial.
Nonetheless, it’s still not impossible. My own experience taught me that the credit and lending system is open to young borrowers if they plan carefully and meet certain requirements.
Understanding the Credit System
Before jumping into specific loan types, it’s helpful to understand how credit works in the United States. If you’ve ever wondered why a simple three-digit credit score can determine whether you get approved for an apartment, a car loan, or even a job, here’s a quick explanation:
- Credit score basics. A credit score commonly varies from 300 to 850. The higher the number, the lower the risk you pose to lenders. FICO (Fair Isaac Corporation) scores are the most common, weighing factors like payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%), and types of credit in use (10%).
- Credit reports. The three main credit bureaus track your credit history. They note how many credit lines you have, how quickly you pay them off, and whether you have any unpaid debts or defaults.
- Building credit. It’s possible to build credit even if you’re just starting out. You can open a secured credit card, become an authorized user on a parent’s card, or take on small credit-builder loans (often offered by local credit unions). Paying bills on time and keeping credit utilization low are key steps.
- Legal age for loans. In most states, you must be 18 or older to sign a contract for a loan independently. If you’re curious about how to get a loan at 17, you often need a co-signer or must look into specialized programs available through certain nonprofits or community-based lenders.
Types of Loans for Young People
There are different types of loans for young people. Your eligibility depends on factors, such as your credit score, income, and whether you have a co-signer. Let’s check the types in a convenient table and compare them to understand what you really need.
The loan type | Description | Who it’s best for | Key caution |
Personal loan | Personal loans are lump-sum loans you repay in monthly installments. They’re versatile: you can use them for emergency expenses, a new laptop for college, a used car, or debt consolidation. The interest rate can be fixed or variable. Some lenders cater to those with no credit, but typically at a higher APR. | Someone with a modest income, looking for predictable monthly payments and a fixed timeline. | Watch out for fees, such as origination fees and high APRs if you have no credit. Always check the total cost. |
Student loan | Federal student loans help cover education costs, whether you’re at a community college or a four-year university. Most U.S. citizens or eligible non-citizens can qualify for unsubsidized loans. These usually have competitive interest rates and more flexible repayment options. | Anyone enrolled at least half-time in a qualifying program | Only borrow what you truly need. Unnecessary student debt can take decades to repay |
Credit cards | A credit card lets you borrow up to a certain limit, repay monthly, and borrow again. Secured credit cards require a deposit equal to your credit limit. On-time payments help you build a credit history quickly. Unsecured credit cards don’t require a deposit but require at least a fair credit score. | Anyone looking to build or rebuild credit | High interest rates and the possibility of racking up debt if you’re not disciplined. |
Co-signed loans | A co-signer, often a parent or guardian, can help you secure a better interest rate if you’re not approved on your own. The co-signer is legally responsible for the debt if you fail to pay. | Young people without credit or stable income. | Missing payments hurts both your credit score and the co-signer’s. |
Credit-builder loans | Many credit unions and online lenders offer credit-builder loans, where the borrowed amount is held in a secured account while you make payments. After you’ve paid in full, you can access the funds—and you’ve built credit in the process. | anyone focused on building a credit history with minimal risk. | payments still must be made on time, or it hurts your credit |
Payday loans | Payday loans carry very high interest and short repayment windows. They’re often considered predatory due to the high fees that can trap borrowers in a cycle of debt. | Typically no one, unless in a dire emergency and with a repayment plan. | The APR can be astronomical, and late payments lead to spiraling costs. |
The Steps You Should Follow
To keep the process easy to follow, here’s a clear structure covering the loan process from start to finish:
- Know your why and determine why you need a loan (emergencies, school expenses, etc.).
- Prepare your financial profile and gather proof of income, check your credit report, and decide if a co-signer is necessary.
- Compare lenders and review interest rates and terms for repayment.
- Submit loan applications within a short time span to minimize credit score impact and be honest on your applications.
- Review the loan offer by reading the contract carefully, looking for hidden fees and confirming the total cost.
- Sign only if you fully understand every clause and set reminders to avoid missed deadlines.
- Pay on time and more than the minimum if possible.
- As your credit score improves, consider refinancing to reduce your APR.
My Personal Experience
When I turned 18, I was living in a small town in Pennsylvania and working part-time at a local cafe while attending community college. My paychecks were modest, and my parents weren’t in a position to help financially. Still, I needed a car to get to class and work.
Initially, I was denied a standard auto loan at a national bank due to no credit history. After researching online I realized credit unions often have more lenient terms for new borrowers. I joined a local credit union and took out a credit-builder loan of $500 for six months. Although it wasn’t the car loan I wanted, on-time payments helped me build a small credit record.
With my new credit standing, I successfully applied for an auto loan at the same credit union. The interest rate was fair, and it allowed me to buy a reliable used car. By making on-time payments, I grew my credit score and eventually qualified for a personal loan to consolidate some high-interest debt in my early 20s. Through these experiences, I learned:
- There’s no shame in starting small.
- Building credit is a marathon, not a sprint.
Mistakes to Avoid
Well, when people start doing something unfamiliar, it’s hard for them to avoid all the mistakes. I’ve prepared the most obvious ones so you could pay attention to them when taking out a loan.
- Overborrowing. Only borrow what’s necessary to keep interest costs in check
- Skipping the fine print. Look for hidden fees or penalties in your loan agreement
- Ignoring credit score. Provide free credit monitoring
- Missing payments. One missed payment can hurt your credit score for years
- Relying on payday loans. Extremely high APRs can trap you in a debt cycle
- Assuming all Lenders are the same. Credit unions and online lenders may have more flexibility than larger banks

Personal Tips for Building Credit Faster
What can you also do in the beginning of your lending activity? There are a few more tips to make everything correctly and build a credit quicker:
- Become an Authorized User
A parent or older sibling can add you to their credit card, boosting your score if they maintain good credit habits. According to a 2022 Experian report, the average FICO® Score in the U.S. is 714. Younger adults often score lower due to short credit histories, but becoming an authorized user helps you “borrow” someone else’s positive history.
- Pay Bills on Time
Payment history is the single biggest factor in your credit score, accounting for 35% of your FICO® Score. One missed payment can drop your score by dozens of points. The Consumer Reports note that consistent, timely payments matter for anyone hoping to graduate to bigger forms of credit, such as auto or mortgage loans.
- Keep Credit Utilization Low
Credit utilization, or how much of your available credit you’re using, makes up about 30% of your FICO® Score. Experts generally advise staying below 30%. For example, if your credit limit is $1,000, try to keep your balance under $300.
- Avoid Excessive Credit Checks
Each hard inquiry (such as when you apply for a credit card or loan) can temporarily lower your credit score. Multiple inquiries in a short time may signal risk to lenders. It’s better to space out applications or group them within a focused time frame (usually 14–45 days), so they count as a single inquiry for some scoring models.
- Check Your Credit Report Regularly
The inaccuracies can unfairly lower your score. Review your reports through AnnualCreditReport so that you can dispute mistakes or signs of fraud right away. Check everything in detail to keep control of your credit history.
Your Loan Journey Starts with Building Credit and Confidence
Getting a loan as a young adult in the U.S. can feel overwhelming. But by doing your homework, knowing your budget, understanding your options, and approaching the process responsibly, you’ll find it’s quite manageable. Your first successful loan can serve as a stepping stone to bigger financial moves down the road, such as buying a house or starting a business.
Remember, loans for young people aren’t scary if you’re prepared. Start small, pay on time, watch your credit score rise, and consider refinancing later if better terms become available. Above all, read your contract carefully and avoid lenders who rush you into signing before you’re comfortable.
While your lack of credit might seem like a barrier, it’s not one you can’t overcome. With careful planning, you can secure the funding you need today and build a solid credit foundation for tomorrow.

Frequently Asked Questions
How to get a loan at 17 in the United States?
Legally, you must be 18 to sign a contract. If you’re 17, you’ll generally need:
- Parental or guardian co-signing
- Credit builder programs through community organizations (rare)
- Waiting until 18 to establish at least a basic work or payment history
Can I get a loan at 18?
Yes. You can apply for personal loans, credit cards, or auto loans, but you’ll likely need proof of income or a co-signer. APRs may be higher if you have zero credit, so a smaller, short-term loan or secured credit card can help build credit first.
How do personal loans for young adults with no credit differ?
Such loans often come with higher interest rates, lower loan amounts, and shorter repayment terms. That said, they can help you establish credit if used responsibly.
What if I need first time loans with no credit history urgently?
If it’s an emergency, look for reputable online lenders or credit unions that serve first-time borrowers. Always compare rates, read the contract thoroughly, and ensure you can handle the monthly payments.
About Author
Stephanie Collier is 25 years old and currently lives in Austin, Texas. After graduating from a local community college, she dove headfirst into understanding personal finance when she realized how little she knew about student loans, credit scores, and budgeting. Today, she writes articles and blog posts to help others in their 20s navigate the complexities of the U.S. financial system. She believes in sharing relatable stories, practical tips, and real-world pieces of advice so that young adults can confidently take control of their finances.