Taking out loans with bad credit can seem impossible, and your life may seem to be put on hold because of three measly numbers.
But it’s not impossible to take out a loan and fund your next step in life with bad or no credit. There are always options available to borrowers, but making those choices can be difficult.
Loans for people with bad credit can often seem risky, and borrowers may suspect that the loan may worsen their score. Yet, taking out a loan can be exactly what people need to restart, or kickstart, their financial security.
Keep reading to learn how to find your best bad credit loans options.
Make Sure Your Lender Soft Checks Your Credit
When you take a loan out from a traditional bank, they usually make a hard check on your credit history. These sorts of credit checks are usually more thorough than the kind of credit report that may be included in a background check.
They impact your credit score. The more times somebody makes a hard credit check against you, the lower your credit score may sink. It will not matter if you end up being approved or not for the loan – a hard credit check will impact your score.
Luckily, many online banks offer a type of personal loan called bad credit loans. These loans usually only make a soft credit check, which does not impact your credit.
Bad credit loans also do not usually require you to put up any collateral. All borrowers have to do is sign a document stating that they promise to repay the loan.
Credit Unions Give Members Loans with Bad Credit
Credit unions are like banks, but with specific requirements to be a member of it. Usually, they just require a person to live in a certain region or be a member of a certain organization. Financial health is rarely a factor when deciding on whether a person can join.
Credit unions consider more than a person’s credit score when choosing who to give loans to. They may look at where you work, or where you went to school. Some may even consider where you live.
The loans that credit unions offer are also usually competitive rates. Their APRs are usually far less than personal loans from other organizations.
Secure Your Loan with Secured Loans, or Get a Cosigner
There are multiple other options when looking to take out a loan with poor credit.
With secured loans, borrowers put something up as collateral that the lender will take in the event that the loan is not paid back. Since there is less risk, the APRs on these loans will usually be far less than unsecured loans.
Cosigners also usually bring down the risk associated with a loan. Cosigners are people that sign on to a loan with a borrower, promising to pay it back if the original borrower does not.
No matter what you choose to do, know that online banks are some of the easiest and quickest ways to get a loan. With no credit check and quick processing, these personal loans can rejuvenate your credit score quicker than loans from traditional banks. They also almost always give people loans with bad credit.
And if you need any help selecting the best bad credit loan for you, you can use our online tool to find the best personal loan for you!