Do you have a bad credit score? If so, you’re in the same boat as one-third of Americans.
You probably know from experience that having a bad credit score can make life pretty challenging. This is especially true if you’re in a situation where you need to apply for a loan and can’t get approved.
The good news, though, is that there is such a thing as a bad credit loan. This means that you can still borrow the money you need, even if your credit is less-than-stellar and need to take out a personal loan no credit check.
Read on to learn everything you need to know about how to get a loan with bad credit.
What are Bad Credit Loans?
As the name suggests, bad credit loans are loans designed for people who do not have good credit scores. That’s not all there is to the story, though.
Bad credit loans typically have higher interest rates than more traditional installment loans. There may also be stricter limits on the amount of money you can borrow. This is because, if you have a bad credit score, your lender considers it risky to loan you money.
If you prove that you can pay back the money you borrow on time, your credit score will improve and you’ll qualify for loans with better terms and interest rates.
There are two different types of bad credit loans:
Secured loans involve the borrower uses a valuable item like a car or a home as collateral. This collateral “secures” the loan. If the individual does not pay back the loan, the lender can legally seize the collateral.
A payday loan is a type of secured bad credit loan.
This is because, when you take out a payday loan, you secure it with a check for the amount borrowed, along with interest and/or fees. The payday lender will cash this check if you don’t repay the loan.
An unsecured loan involves signing a contract and promising to pay the loan back according to the terms and conditions laid out in that contract.
People who fail to abide by these terms and conditions may have legal action taken against them, or their debt may be sent to a collections agency.
A personal loan online is an example of an unsecured bad credit loan.
Generally speaking, an unsecured bad credit loan is less risky than a secured loan.
How to Get a Loan with Bad Credit
Are you interested in applying for a bad credit loan? If so, these tips can help you improve your chances of getting approved:
Work with a Credit Union
Credit unions are often a bit easier to work with than banks. They’re smaller and have more of a community-centered focus.
Because of the difference in culture, an employee at a credit union may be more willing to listen to you and approve your bad credit personal loan guaranteed approval application.
This is especially true if you can prove that your financial situation has improved and you’re able to repay your loan in a timely manner.
Work with an Online Lender
If you can’t get approved at a credit union, you might want to look into borrowing money from a payday loan online no credit check lender instead. Online lenders often offer bad credit loan options and have less stringent terms and conditions.
Even if you do get approved for a loan from a credit union, you might want to check with an online lender, anyway. They might give you better terms and lower interest rates.
Limit the Amount of Time You Spend Applying
Try not to spread the period of time in which you’re applying for loans. Limit your applications to a 30-day period if you can. This shows the credit bureaus that you’re just shopping around for a loan and are not regularly trying to borrow more money (this doesn’t help your credit score).
Look into Installment Lenders
You might also want to look into borrowing from a personal installment lender who provide no credit check loans. Personal installment lenders look at other factors besides your credit score, including your income and employment history. Often, you can get approved for an installment loan if you meet a certain income requirement.
Get a Co-Signer
Finally, you might want to consider getting a co-signer. A co-signer is someone with a higher credit score than you who also agrees to the terms of your loan.
When they agree to these terms, they also agree to pay back the loan in the event that you cannot. If you do not pay back the loan, their credit score will be affected.
How to Improve Your Credit Score
You know how to get a loan with bad credit. But, what if you also want to avoid being in this position in the future? Wouldn’t it be good to improve your credit score and avoid needing to apply for bad credit loans?
If this is your mindset but you’re not sure how to go about improving your credit score, start by giving these tips a try:
- Check your credit report and correct errors that are lowering your score
- Pay down old debts before taking out new loans or opening new credit accounts
- Make all your payments on time (set up automatic payments or monthly reminders so you don’t forget)
- Keep your credit utilization ratio (the ratio of available credit to the amount of money you charge each month) as low as possible
- Consolidate your credit card debt
- Avoid closing old credit accounts, as this can mess with your credit utilization ratio
Remember, you can also use your bad credit loan to improve your credit score. If you make all your payments on time, your score will increase and you might not need to worry about bad credit loans later on.
Apply for a Bad Credit Loan Today
As you can see, there are lots of strategies you can implement to figure out how to get a loan with bad credit.
If you need money right away and don’t have time to work on improving your credit score, use these tips to increase your chances of getting approved.
Ready to apply for a bad credit loan? Apply online with us today. We’ll get back to you as soon as possible and let you know if you’ve been approved! Here are some other articles that you might find interesting: