I am under 18 years old, in the US, my parents have terrible credit, how can I take out a loan?
Depending on the state this might not be possible. Loans are considered contracts, and various states regulate how minors may enter into them. For example, in the state of Oregon, a minor may NOT enter into a contract without their parent being on the contract as well. So you are forced to wait until you turn 18. At that time you won't have a credit history, and to lenders that often is worse than having bad credit. I can't help with the car (other than to recommend you buy a junker for $500-$1,000 and just live with it for now), but you could certainly get a secured credit card or line of credit from your local bank. The way they are arranged is, you make a deposit of an amount of your choosing (generally at least $200 for credit cards, and $1,000 for lines of credit), and receive a revolving line with a limit of that same amount. As you use and pay on this loan, it will be reported in your credit history. If you start that now, by the time you turn 18 you will have much better options for purchasing vehicles. I am 17 and currently have a loan out for a car. My parents also have terrible credit, and because I knew this I was able to get around it. Your co-signer on your loan does not have to be your parent, at least in Wisconsin, I used my grandmother, who has excellent credit, as my cosigner. With my loan, we had made it so it doesn't hurt her credit if I don't get my payments in on time, maybe this is something for you to look into.
You need a cosigner. Someone prepared to repay the mortgager if you should fail to. Needless to say this is going to have to be someone who knows you and trusts you very much. One way is to find someone prepared to share a house with you. Buy a bigger house than you would otherwise need. You would own half each, and the sharing agreement would specify that if one of you defaulted on their payments the other would get a larger share according to how much extra they end up paying. The other way is to find a silent partner, who doesn't live there. They put up no money unless you actually default. They would almost certainly have to be part owners, but you can structure the agreement so that you end up with the whole house if you succeed in paying off the mortgage, or miss no payments until you sell. Parents sometimes do this for their kids. In the US, money talks and bullshit walks. You can skip any credit history requirement if you demonstrate your ability to pay in a very obvious way. Credit history is just a standardized way of weeding out people that cannot reliably pay, instead of having to listen to an individual's excuses about how the bank overdrafted their account five times while they were waiting for their friend to pay them back for bubble gum. If you can show up with a wad of cash, you can get the car, or the apartment, or the bank account without the troubles of everyone else.  But you can begin building credit with a secured credit card pretty easily. This will be useful for things like utilities and sometimes jobs. Also, banks won't be opposed to giving you credit if you have a lot of money in an account with them. You should be able to maintain an exemption from all socioeconomic problems in the United States, solely due to your experience with money and assets. You're going to have a huge problem getting approved for anything as long as you have an unpaid bill on your report. Pay it and make sure its reported as paid in full - ASAP. Once that settled, your credit will start to improve slowly. Can't do anything about that, it will take time. You can make the situation improve a bit faster by lending money to yourself and having it reported regularly on your report. How? Easy. Get a secured credit card. What does it mean? You put X amount of money in a CD and the bank will issue you a credit card secured by that CD. Your credit line will be based on the amount in that CD, and you'll probably pay some fees to the bank for the service (~$20-50/year, shop around). You might get lucky and find a secured card without fees, if you look hard enough. Secured cards are reported as revolving credit (just as any other credit card) and are easy to get because the bank doesn't take the risk - you do.  If you default on your payments - your CD goes to cover the debt, and the card gets cancelled. But make absolutely sure that you do not default. Charge between 10% and 30% of the credit limit each month, not more. Pay the balance shown on your credit card statement in full every month and by the due date shown on your monthly statement.  It will take a while, but you would typically start noticing the improvement within ~6-12 months. Stop applying for stuff. Not store cards, not car loans, you're not going to get anything, and will just keep dragging your scores down. Each time you have a pull on your report, the score goes down. A lot of pulls, frequent pulls - the score goes down a lot. Lenders can see when one is desperate, and no-one wants to lend money to desperate people.  Optimally lenders want to lend money to people who doesn't need loans, but in order to keep the business running they'll settle for slightly less - people who don't usually need loans, and pay the loans they do have on time. You fail on both, as you're desperate for a loan and you have unpaid bills on your report. "Let me give you some advice from someone who has experience at both ends - had student loan issues myself and parents ran financial aid department at local university. Quick story of my student loan.  I graduated in debt and could not pay at first due to having kids way too early.  I deferred.  Schools will have rules for deference.  There are also federal guidelines - lets not get specific on this though since these change every year it seems.   So basically there is an initial deferment period in which any student can request for the repayments to be deferred and it is granted.  Then there is an extended deferment.  Here someone has to OK it.  This is really rather arbitrary and up to the school/lender.  My school decided to not extend mine after I filled out a mound of paperwork and showed that even without paying I had basically $200 a month for the family to live off past housing/fixed expenses. Eventually they had to cave, because I had no money so they gave me an extended deferment.  After the 5 years I started paying.  Since my school had a very complex way to pay, I decided to give them 6 months at a time.  You would think they would love that right?  (On the check it was clearly stated what months I was paying for to show that I was not prepaying the loan off) Well I was in collections 4 months later.  Their billing messed up, set me up for prepayment.  They then played dumb and acted like I didn't but I had a picture of the check and their bank's stamp on the back... They couldn't get my loan out of collections - even though they messed up.  This is probably some lower level employee trying to cover their mistake.  So this office tells creditors to leave me alone but I also CANNOT pay my loan because the credit collection agency has slapped a 5k fee on the 7k loan.  So my loan spent 5 years (kid you not) like this.  It was interest free since the employee stopped the loan processing. Point being is that if you don't pay the lender will either put your loan into deferment automatically or go after you.  MOST (not all) schools will opt for deferment, which I believe is 2 years at most places.  Then after that you have the optional deferment.  So if you keep not paying they might throw you into that bucket.   However if you stop paying and you never communicate with them the chances of you getting the optional deferment are almost none - unless school doesn't know where you live.  Basically if you don't respond to their mail/emails you get swept into their credit collection process.  So just filling out the deferment stuff when you get it - even if they deny it - could buy you up to 10 years - kid you not.   Now once you go into the collection process... anything is game.  As long as you don't need a home/car loan you can play this game.  What the collection agency does depends on size of loan and the rules.  If you are at a ""major"" university the rules are usually more lax, but if you are at the smaller schools, especially the advertised trade/online schools boom - better watch out.  Wages will be garnished very soon.  Expect to go to court, might have to hire an attorney because some corrupt lenders start smacking on fees - think of the 5k mine smacked on me.   So the moral of the story is you will pay it off.  If you act nice, fill out paperwork, talk to school, and so on you can probably push this off quite a few years.  But you are still paying and you will pay interest on everything.  So factor in that to the equation.  I had a 2.3% loan but they are much higher now.   Defaulting isn't always a bad thing.  If you don't have the money then you don't have it.  And using credit cards to help is not the thing to do.  But you need to try to work with the school so you don't incur penalties/fees and so that your job doesn't have creditors calling them.   My story ended year 4 that my loan was in collection.  A higher up was reviewing my case and called me.  Told her the story and emailed her a picture of their cashed check.  She was completely embarrassed when she was trying to work out a plan for me and I am like - how about I come down tomorrow with the 7k.  But even though lender admitted fault this took 20+ calls to agencies to clear up my credit so I could buy a house.   So your goal should be:" Not only should you do this, you should tell your friends to do it too. Especially if a parent comes in to the bank with the child, banks fall over themselves to provide a card to someone whose only income is allowance. Really. Later, if you're 21 and your car broke and you don't get paid for another 11 days, NOBODY will lend you the money (or those money mart places that charge 300% a year will) to fix it. Never mind score (and yes for sure having a good score will be a result, and a good one) just having the card for emergencies makes all the difference to your early twenties. My kids have several friends who now can't get credit cards (some are students, some are underemployed) and end up missing paid days of work due to car troubles they can't pay to fix, or using those payday lenders, or other things that keep you poor. Get one while you can. Using it sensibly means you will have a great credit score in a decade or so, but just plain having it is worth more than you can know if you're not 18 yet. A traditional bank is not likely to give you a loan if you have no source of income. Credit card application forms also ask for your current income level and may reject you based on not having a job. You might want to make a list of income and expenses and look closely at which expenses can be reduced or eliminated. Use 6 months of your actual bills to calculate this list. Also make a list of your assets and liabilities. A sheet that lists income/expenses and assets/liabilities is called a Financial Statement. This is the most basic tool you'll need to get your expenses under control. There are many other options for raising capital to pay for your monthly expenses: Sell off your possessions that you no longer need or can't afford Ask for short term loan help from family and friends  Advertise for short term loan help on websites such as Kijiji Start a part-time business doing something that you like and people need. Tutoring, dog-walking, photography, you make the list and pick from it. Look into unemployment insurance. Apply as soon as you are out of work. The folks at the unemployment office are willing to answer all your questions and help you get what you need. Dip into your retirement fund. To reduce your expenses, here are a few things you may not have considered: If you own your home, make an appointment with your bank to discuss renegotiation of your mortgage payments. The bank will be more interested in helping you before you start missing payments than after. Depending on how much equity you have in your home, you may be able to significantly reduce payments by extending the life of the mortgage. Your banker will be impressed if you can bring them a balance sheet that shows your assets, liabilities, income and expenses.   As above, for car payments as well. Call your phone, cable, credit card, and internet service providers and tell them you want to cancel your service. This will immediately connect you to Customer Retention. Let them know that you are having a hard time paying your bill and will either have to negotiate a lower payment or cancel the service. This tactic can significantly reduce your payments. When you have your new job, there are some things you can do to make sure this doesn't happen again: Set aside 10% of your income in a savings account. Have it automatically deducted from your income at source if you can. 75% of Americans are 4 weeks away from bankruptcy. You can avoid this by forcing yourself to save enough to manage your household finances for 3 - 6 months, a year is better. If you own your own home, take out a line of credit against it based on the available equity. Your bank can help you with that. It won't cost you anything as long as you don't use it. This is emergency money; do not use it for vacations or car repairs. There will always be little emergencies in life, this line of credit is not for that.  Pay off your credit cards and loans, most expensive rate first. Use 10% of your income to do this. When the first one is paid off, use the 10% plus the interest you are now saving to pay off the next most expensive card/loan. Create a budget you can stick to. You can find a great budget calculator here: http://www.gailvazoxlade.com/resources/interactive_budget_worksheet.html Note I have no affiliation with the above-mentioned site, and have a great respect for this woman's ability to teach people about how to handle money. "If you're in the US then no.  You cannot enter a binding contract therefore you will not get a loan from a bank. Cosigner or no cosigner, anything to do with a loan and a bank will not involve you.  Your parents can get a loan, then they can give you the money, then you can pay them for their payments, but none of that means the loan has anything to do with you.  It's their loan, if they default it's on them. Given your age, you probably will ignore everyone else's advice here about this trip being a bad idea if you can't afford it, but you should reconsider it.  You will be paying for this trip long after the fun and excitement has worn off.  This is the cycle that sends alot of families into bankruptcy, and it's a horrible habit to learn so young.  ""Loan"" shouldn't even be in your vocabulary dealing with anything other than a library book." Smart parents not wanting to get stuck with a student loan or co-signing on a loan.   because rent is so high Are you able to live with your parents?  Is there anyway to reduce the cost of rent like renting a room?  Can you move somewhere where the rent is cheaper? working 25 hours per week Working 25 hours per week and taking 6 hours is a pretty light schedule.  It is not even 40 hours per week.  What is stopping you from working 40 hours and paying for school from your salary?   In my own life I created a pretty crappy situation for myself when I was a young man.  I really wanted to go to a prestigious university, but ended up going to a community college, and then to a university that was lesser known in a less expensive area.  I had to work like crazy, upwards of 50 hours per week.  I also took a full load in a difficult degree program.   You probably don't have to go to the extremes that I went through, but you can work more.  Most adults work at their jobs well more than 40 hours per week, then come home and continue to work (on the house, raising kids, trying to start a side business, etc...).  So you might as well become an adult now. There are ways to become independent from your parents for FAFSA like have a baby, get married, or join the military.  I'd only recommend the last one as you will also receive the GI Bill.  Another option is to try and obtain a job that offers financial aid. At your age, the only place you are going to get a loan is from relatives. If you can't... Go to next year's conference. Missing it this year might feel like a disaster, but it really, really isn't. "Tough spot. I'm guessing the credit cards are a personal line of credit in their name and not the company's (the fact that the business can be liquidated separately from your parents means they did at least set up an LLC or similar business entity). Using personal debt to save a company that could have just been dissolved at little cost to their personal credit and finances was, indeed, a very bad move. The best possible end to this scenario for you and your parents would be if your parents could get the debt transferred to the LLC before dissolving it. At this point, with the company in such a long-standing negative situation, I would doubt that any creditor would give the business a loan (which was probably why your parents threw their own good money after bad with personal CCs). They might, in the right circumstances, be able to convince a judge to effectively transfer the debt to the corporate entity before liquidating it. That puts the debt where it should have been in the first place, and the CC companies will have to get in line. That means, in turn, that the card issuers will fight any such motion or decision tooth and nail, as long as there's any other option that gives them more hope of recovering their money. Your parents' only prayer for this to happen is if the CCs were used for the sole purpose of business expenses. If they were living off the CCs as well as using them to pay business debts, a judge, best-case, would only relieve the debts directly related to keeping the business afloat, and they'd be on the hook for what they had been living on. Bankruptcy is definitely an option. They will ""re-affirm"" their commitment to paying the mortgage and any other debts they can, and under a Chapter 13 the judge will then remand negotiations over what total portion of each card's balance is paid, over what time, and at what rate, to a mediator. Chapter 13 bankruptcy is the less damaging form to your parent's credit; they are at least attempting to make good on the debt.  A Chapter 7 would wipe it away completely, but your parents would have to prove that they cannot pay the debt, by any means, and have no hope of ever paying the debt by any means. If they have any retirement savings, anything in their name for grandchildren's college funds, etc, the judge and CC issuers will point to it like a bird dog. Apart from that, their house is safe due to Florida's ""homestead"" laws, but furniture, appliances, clothing, jewelry, cars and other vehicles, pretty much anything of value that your parents cannot defend as being necessary for life, health, or the performance of whatever jobs they end up taking to dig themselves out of this, are all subject to seizure and auction. They may end up just selling the house anyway because it's too big for what they have left (or will ever have again). I do not, under any circumstance, recommend you putting your own finances at risk in this. You may gift money to help, or provide them a place to live while they get back on their feet, but do not ""give till it hurts"" for this. It sounds heartless, but if you remove your safety net to save your parents, then what happens if you need it? Your parents aren't going to be able to bail you out, and as a contractor, if you're effectively ""doing business as"" Reverend Gonzo Contracting, you don't have the debt shield your parents had. It looks like housing's faltering again due to the news that the Fed's going to start backing off; you could need that money to weather a ""double-dip"" in the housing sector over the next few months, and you may need it soon." "When I was in high school, my mom got me a joint credit account with both of our names on it for exactly this reason. Well, that, and to have in case I found myself in some sort emergency, but it was mostly to build credit history. That account is still on my credit report (it's my oldest by a few years), and looking at the age of it, I was 17 at the time we opened it (and I think my younger sister got one around the same time).  In my case, I now have an ""excellent"" credit score and my weakest area is the age of my accounts, so having that old account definitely helps me. I don't think I've really taken advantage of it, and I'm not sure if I'd really be worse off if my mom hadn't done that, but it certainly hasn't hurt. And I plan on buying a house in the next year or so, so having anything to bump up the credit score seems like a good thing." In general, minors cannot enter into legally binding contracts --   which is what credit accounts are -- so an individually held card is   probably not an option for you right now. You will not be approved for a credit card because you are minor. The only option credit card wise for you is for your parents to add you on as an authorized user onto their accounts. The upside is that you and your parents can work out a monthly payment for the amount you spend on your equipment, the downside is that if your parents don't pay their credit card bill, your credit score/report can be negatively affected. (This also depends on the bank, however, all the banks I bank with report monthly payment activities on authorized users' credit reports as well. There might be a bank that doesn't.)  In terms of credit cards, there is nothing you can do. What you could do as the comments have suggested is either save up money for the equipment you want, or buy something cheaper. It sounds like your current loan is in your name. As such, you are responsible for paying it. Not your family, you. It also sounds like the loan payments are regularly late. That'll likely drastically affect your credit rating. Given what you've said, it doesn't surprise me that you were declined for a credit card. With the information on your credit report, you are a poor risk. Assuming your family is unable to pay loan on time (and assuming you aren't willing to do so), you desperately need to get your name off the loan. This may mean selling the property and closing out the loan. This won't be enough to fix your credit, though. All that will do is stop making your credit worse. It'll take a few years (five years in Canada, not sure how many years in India) until this loan stops showing up on your credit report. That's why it is important to do this immediately. Now, can a bank give you a loan or a credit card despite bad credit? Yes, absolutely. It all depends on how bad your credit is. If the bank is willing to do so, they'll most likely charge a higher interest rate. But the bank may well decide not to give you a loan. After all, your credit report shows you don't make your loan payments on time. You may also want to request your own copy of your credit report. You may have to pay for this, especially if you want to see your score. This could be valuable information if you are looking to fix your finances, and may be worth the cost. If you are sure it's just this one loan, it may not be necessary. Good luck! Edit: In India CIBIL is the authority that maintains records. Getting to know you exact score will help. CIBIL offers it via TransUnion. The non-payment will keep appearing on your record for 3 years. As you don't have any loans, get a credit card from a Bank where you have Fixed Deposits / PPF Account as it would be easier to get one. It can then help you build the credit. If your parents can spare it, take the money from your parents and return it to them with interest. It is always better to pay interest to family than to a bank. Are financial institutions less likely to lend me money because of my age Yes.  But they are especially unlikely to loan you money because you have little income.   or because they know I avoid interest by paying things off aggressively? This won't affect them.  But you might ask yourself how much credit history you have.  Credit history can include all of loans, credit cards, rent, utilities, etc.  You mention three loans.  But you don't mention rent or utilities.  You may simply not have much credit history, even if what you do have is good.   But again, the biggest thing that they will look at is your income history.  If you have a small income, then it doesn't matter what your payment history is.  They don't want to loan money to people who need money.  They want to loan money to people who don't need to borrow but are instead bringing a future purchase into the present.   The ideal recipient is someone who has a high income and spends it all every month.  Such a person is likely to borrow heavily but be able to keep up the payments.   Obsessing about your ability to borrow is probably the wrong approach.  Instead focus on how you can meet your goals without borrowing.  Eventually your ability to pay will catch up.  Then they'll offer you money.  Of course, you might not need it then.   Note that when I say little income, I'm talking about their perspective.  You may be fully on track and making decent money or even very good money for your age.  But they're looking for people who are mature in their careers and regularly bringing home large sums but who spend it faster than they can get it.