If you’re wondering how to get a loan with bad credit, look no further than this article. In it, we go over 7 outstanding tips that will get you paid.
Do you have a less-than-stellar credit score? If so, you’re not alone. Nearly one-third of Americans are in the same boat.
Having a low credit score can be incredibly frustrating, especially if you’re in need of a loan.
If you’ve been wondering how to get a loan with bad credit, keep reading.
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Learn Your Credit Score
Before you look for a loan, it’s important to learn your credit score. Many people—nearly 60 percent—don’t even know what their credit score is. If you’re part of this group, you might assume you have a bad credit score when you really don’t!
To learn your credit score, you can check your most recent credit card or loan statement. It usually will list your credit score for you. Your bank might also have a tool to tell you your score for free.
You can also use a free, reputable credit score service like Credit Karma. Just be sure to do your research first and avoid giving personal information to an untrustworthy website.
What Makes up a Good Credit Score?
Mostly when you learn your credit score, the resource you used to learn it will tell you whether you have an excellent, good, fair, poor, or bad credit score. These are the guidelines used to determine your score:
- Excellent: 750 and above
- Good: 700-749
- Fair: 640-699
- Poor: 600-640
- Bad: Below 600
Not happy with your credit score? Luckily, you’re not stuck with it.
How to Increase Your Credit Score
There area lot of things you can do to increase your credit score. Some basic steps you ought to take if you want to raise your score include:
- Pay down your credit card balance each month
- Keep your credit utilization rate (the amount of credit you’re using) below 30 percent
- Leave old, paid off debton your credit report
- Pay your bills on time
It’s also important to avoid situations that hint at risks to your credit. For example, taking out a cash advance or using your card at a business that suggests financial problems (pawnshops, divorce attorneys, etc.).
How to Get a Loan with Bad Credit
If your credit score is impacting your ability to get a loan, the first thing you ought to do is figure out why your credit score is low. Then, you can take steps to improve it.
Though, sometimes you can’t afford to wait for your credit score to go up. Sometimes, you need to get a loan right away.
If you need to get a loan and have bad credit, these seven tips can help:
1. Look into Personal Installment Lenders
If you need money immediately, consider borrowing from a personal installment lender.
A personal installment lender will consider a variety of factors beyond your credit score when deciding whether to approve your loan application.
This increases your chances of approval and makes it easier for you to cover an emergency expense or merge your high-interest debt.
2. Consider a Secured Loan
If you have bad credit but need a loan, you might want to consider a secured loan. When you take out a secured loan, you offer an asset like your car or your home as collateral.
Lenders are more likely to approve your loan when they know they can take that asset and use it to cover their losses.
3. Find a Co-Signer
If possible, try finding someone to co-sign your loan. A co-signer is someone who agrees to be responsible foryour loan payments if you can’t make them.
When you have a co-signer, the interest rate for your loan will be calculatedbased on their credit rating. So, you have the potential to get a loan with better terms than what you’d get if you were using your own credit score.
4. Consider Joining a Credit Union
If you’ve been turneddown for a loan by your bank, consider reaching out to a credit union instead.
Credit unions typically take more factors into account than just your credit score. They consider things like your place of work, where you live, and where you went to school.
Credit unions also offer services like financial education and counseling and are more willing to work with you to help you improve your score and get approved for a loan.
5. Look into Bad Credit Loans
Some lenders offer loans that are meantfor individuals with bad credit scores. A bad credit loan typically comes with a higher interest rate than a traditional loan.
It can be frustrating to have to pay higher interest rates. But, if you’re in need of cash quickly, a bad credit loan can be a good option.
6. Avoid Payday Loans
You might be tempted to take out a payday loan when you’re in need of money right away. Do your best to resist this temptation though.
Payday loans come with high-interest rates—sometimes over 300 percent! Many people who take out these loans end up trapped in a serious debt cycle and never have a chance to actually improve their credit scores.
7. Compare Lenders
Remember, you don’t have to agree to the terms of the first lender who agrees to offer you a loan.
Even if you have a bad credit score, there’s still a chance that multiple lenders will approve your application.
Be particular about which lender you work with and compare terms carefully. Take your time and find the lender who offers the best terms.
The Bottom Line…
Before you apply for a loan with bad credit, check your credit rating and take steps to increase your credit scores.
Expect to a high interest rate if you have poor credit, and stay away from payday lenders.
Now you know how to get a loan with bad credit, it’s time to put these tips into action and borrow the money you need.
The Lenders Network has the largest network of mortgage lenders that specialize in home loans for borrowers with all types of credit scores. We will match you will the best lender based on your specific situation.