Your credit score may be lower than you’d like it to be if you’ve been late paying bills in the past or have a mountain of debt piling up. Poor credit can have a significant impact on your credit when it comes to making lenders believe in your ability to pay back your loan over time.
A personal loan can be a good way to pay for immediate expenses. Although a bad credit score means higher interest rates, getting a personal loan with a bad credit history is still possible by taking a few simple steps to improve your score and contacting several lenders.
What does it mean to have bad credit?
Almost every American has a credit file compiled by one of three credit bureaus: Equifax, TransUnion, or Experian. Your credit file gives you a credit score, which is a number to determine how potentially risky a borrower you might be.
The credit points range from 300 to 850. Generally, anything below 580 is considered “unsatisfactory.” If you have a poor credit history, you tend to have a short credit history, a lot of debt relative to your income, or a combination of these factors.
Ways to get a personal loan with bad credit
Understanding what to expect when applying for a personal loan will help you prepare for the process. If you have an imperfect credit history and want a personal loan, here are five steps to keep in mind.
1.Try to improve your credit first.
You can try to work on building credit before you apply for a loan if you don’t need personal credit immediately.
There are special varieties of personal loans, such as credit development loans, that almost anyone can apply for. They help improve your credit history. These types of loans allow you to borrow a certain amount, but the catch is that you have to make payments before you can access the money. Information about your on-time payments goes to credit reporting agencies, and you improve your credit rating.
To improve your credit, you can do the following:
- Work on paying off debt
- Correct errors on your credit report
- To improve your credit, think about using a secured credit card
- Make on-time payments
But, of course, none of these approaches will work if you need to get a loan right now.
2.Research lenders offering bad credit loans
There are a huge number of lenders that make personal loans with bad credit that target borrowers with less than perfect credit. Often this loan can be obtained on acceptable terms, even though the interest rate may be slightly higher than for borrowers with good credit. Just explore the options available to find a lender and request pre-approval to see if you can get the loan you need at an acceptable rate.
Good Friend Loans offers Best Loans for Bad Credit. The procedure for granting a loan is almost identical to that when it comes to a traditional online loan. Here, however, it should be noted right away that each lender sets its own rules, based on which the company then checks its customers. So, a person applying for a loan with no credit history must have:
- American citizenship and ID card;
- Permanent registration address and living in the country;
- American telephone number and e-mail address;
- Bank account with access to electronic banking, number of the account;
- Full legal capacity and not to be in a state of consumer bankruptcy;
- Permanent and regular income (they can come from various sources).
Good Friend Loans makes it easy to borrow money. The company’s services are fast, safe and easy. All you need to do is fill out and submit an application within 3-5 minutes on your smartphone and get a quick online solution. Loans are provided to borrowers with bad credit history based on some simple basic criteria that most applicants can meet. You won’t have to pay any service fees.
Add a co-signer if necessary
A co-borrower is a person who makes a commitment to the loan with you. If you cannot repay the loan, they agree to do it for you. A co-borrower can help you get a loan if they have a better credit rating and credit history, in case you have trouble getting a loan.
However, if you have trouble paying off the loan, it can cause your personal relationship to deteriorate. Be sure you both know what you are signing up for if you decide to take out a loan with a co-borrower.
Ask for an in-person interview
If you have been denied credit because of your credit history, schedule an appointment with a loan officer. You may be able to convince them that your past credit mistakes were the result of a situation that you had no control over and are no longer relevant.
This may not always work, because lenders sometimes have strict rules that they cannot deviate from. However, it’s worth a try, especially if lenders do manual underwriting or if you have a valid excuse for poor credit, such as an aversion to debt that has prevented you from building a credit history.
Look into secured loans
A secured loan is a loan backed by property you have, such as a house or car. Because secured loans use collateral to secure the loan, they usually have higher rates than unsecured loans. If you have collateral to secure a loan, this may be your best option if you have a bad credit history.