10 Methods that Help People with Bad Credit to Obtain Personal Loans

Your credit score becomes an important factor when applying for a loan. A credit score is a summary of your past loans, credit history, and repayment history; lenders use it to determine your repayment capacity. Personal loans are unsecured loans, so lenders must assess your credit rating even more carefully to determine the risk associated with providing credit. For a smooth loan approval process, then, a good credit score is essential.

Here are some ways to get a personal loan with bad credit.

Although bad credit won’t be a problem for a personal loan, you will need to work harder to get money now.

  • Always shop around. Do not accept the first personal loan offer. Be sure to look for hidden fees like origination fees and penalties for early payments. Even if your credit score is not good, you don’t have to take out a loan that could put you at risk. Pay attention to any origination fees, early payment penalties or other charges that could make it difficult for you to repay your personal loan.
  • Co-signer: Even if your credit is not perfect, a co-signer may be able to help you. Co-signers must be responsible for timely payments. An error could prevent you from getting a better score or harm your co-signer’s credit.
  • Visit your bank. It is possible to apply online for a personal loan, but you may have better options with your bank or credit union. To speak with a loan officer, call or visit your bank. Ask the bank if they offer personal loans to those with poor credit ratings. Many lenders offer credit-building loans that have shorter terms to help with damaged credit.
  • If you have collateral, your lender may approve your loan application. Ask about secured loans when you talk to your bank’s loan officer.
  • Ask about borrowing less: If you are denied for the amount you desire, think about whether you can borrow less. If a borrower has poor credit, some lenders will not approve them if they request a large amount of money.
  • Reduce your repayment term. You will pay less interest and be approved more often if the lender knows that you can repay the money in a shorter time.
  • Do not wait to improve your credit score. If your FICO score is rising and you are able to delay borrowing money for a few more months, you may end up paying a lower interest rate when you apply for a personal loan.
  • You can also look into companies such as Upstart. To help you qualify for a loan, they will need to know about your education and work history.
  • Consider a credit card instead. If you have a limited amount of money to spend, it is easier to get approved for a credit card. While you might pay higher interest rates and fees to open an Account, credit card issuers will guaranteed credit card approval no deposit for those with low credit scores as low as 500.
  • Peer-to-peer lending networks are available. Even if you have little experience borrowing money or your credit scores indicate a lack of activity, it is possible to still get a low credit score. Peer-to peer lenders will consider your income, your work history, education, as well as the purpose of your personal loan. They also give less weight to credit history. Lending Club offers personal loans upto $40,000.

What happens if I can’t get the personal loan when I need?

Payday lenders may be an option if your credit score is so poor that it’s impossible to get approved for a personal loan. It is estimated that payday loans have an average APR of 400%. Payday loans are considered predatory financial products by the Consumer Financial Protection Bureau (CFPB). They are designed to trap borrowers into a never-ending cycle that leads to crippling debt.

If you have poor credit and need a personal loan, an alternative option is to use your vehicle as collateral. This type of lending is not allowed in every state. If you fail to make your payments on time, the lender can legally take your vehicle and sell it at auction. They also have the right to sue you for any remaining loan balance (plus any fees).

Alternative Personal Loans

Ask your bank, credit union, or a local credit counselling agency about personal loans alternatives in your area. There are many lenders that offer instant loan to people with poor credit. You will need to inquire about this type of loan, as it is not always available. To become a member of a credit union, you can open a savings bank with a $5 deposit.

OppLoans.com, an alternative loan lender, has high interest rates but a 59% to 160% APR is still lower than the typical personal loan provider. Although they don’t require credit checks and approval is quick, there are high interest rates that could lead to you being in debt.

If you take out $1,000 at 100% APR, the total amount you will repay is $1,619.91. Although this is not ideal, it’s still a lot less than what you’ll owe when you borrow $1,000 from loan lenders at 400% APR. You’ll pay $4,130.65


You should not be unable to get the money you need because of bad credit. Getting a personal loan can be confusing, so it is important to shop around and understand the terms. An important first step in finding a low-interest personal loan is understanding your credit history. With this knowledge, you’ll be able to find the right loan terms that will help you achieve your financial goals.

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