7 steps to getting a personal loan with bad credit

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Many lenders require borrowers to meet certain credit score requirements for a personal loan. For example, to qualify for a loan at the most competitive rate, you will generally need a credit score of 740 or higher.

There are, however, many people who not have perfect credit but still need to borrow money. If you are one of them, you have a few options available. If you follow these seven steps, you should be able to find the right loan for you.

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1. Try to improve your credit first

If you don’t need a personal loan right away, you can try working on building up credit before you apply.

There are special types of personal loans, such as credit loans, that almost anyone can qualify for. These types of personal loans help improve your credit score. They allow you to borrow up to a certain amount, say $ 1,000 – but the catch is you make your payments first, before having access to the money. Your on-time payments are reported to credit bureaus so you can improve your score.

Here are some other things you can do to improve your credit:

Of course, neither of these approaches will work if you have to borrow now.

2. Find a co-signer

Another great option for getting a personal loan with bad credit is having someone co-sign for you.

If you have a family member or friend with good credit, they may be willing to agree to stand surety for you with the lender. While this makes them legally responsible for paying with you, it also makes it much easier for you to get approval for the loan since the lender considers their credit as well as yours.

Often times, a co-signer can help you secure a personal loan with a good interest rate from a lender of your choice.

3. Explore borrowing alternatives

If you can’t find a co-signer, make sure a personal loan is the best way to borrow.

You may want to consider other options, such as a 0% APR credit card. If you can qualify, you may be able to pay no interest during an introductory period. And sometimes qualifying for a credit card can be easier than getting a personal loan.

Just be aware that credit card interest is very expensive if you don’t qualify for a special promotional rate, so this isn’t always the best approach.

4. Contact the credit institutions with which you do business

If you really want a personal loan, you can try contacting a bank or credit union that you already do business with. If you have an established relationship with them, they may be more willing to ignore your imperfect credit and give you a loan.

5. Look for lenders offering bad loans

There are actually many bad credit personal loan lenders that cater specifically to borrowers with poor credit.

Although the interest rate on these loans may be a bit higher than for borrowers with good credit, it is still often possible to get a loan on reasonable terms when you need to borrow. Just research the options available to find a lender and submit a request for pre-approval to find out if you are likely to get the loan you need at a decent rate.

6. Request an in-person interview

If you are refused a loan because of your credit rating, see if you can ask the loan officer to meet with you. You may be able to convince them that your past credit errors were the result of a situation that was out of your control and has since been resolved.

This will not always work, as sometimes lenders have strict guidelines that they cannot deviate from. But it’s worth a try, especially if lenders are doing a manual underwriting or you have a good excuse for bad credit, like aversion to debt, that has kept you from building a credit history.

7. Look carefully for loan conditions

Finally, if you are approved, make sure you research and understand the repayment terms of the personal loan. You’ll want to make sure the interest rate is reasonable, payments are affordable, and fees are minimal.

The good news is that if you follow these seven steps, you should hopefully have no problem finding a loan that is right for you.


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