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If you found this article, then you already know it’s tough to get a loan when you’ve got a bad credit score. But, the good news is, it’s still possible to get one.
Before we get into, though, one thing to cover. Cuz we’re all about financial independence here. That’s just how we roll.
Before you get that personal loan, make sure you really need it. And that, if you get it, you’ll use it to improve your financial situation. Not make it worse.
Yes, emergencies pop up and take the decision out of your hands. And using a personal loan to consolidate other debts may make smart financial sense. Using it to fund travel, video games or to throw money at the stock market or cryptocurrency… well, not so much.
Okay, lecture over. Onto how to get that loan if your credit ain’t so hot. A poor credit score by FICO ranges between the scores of 350 to 579. And many companies that offer personal loans will want to see a credit score north of 670.
Bad credit scores are usually the result of two things. Either you’re not paying your debts on time. Or you’re not paying them at all. Which makes you a high risk in the eyes of a lender.
So many lenders may not even give you the time of day if you try to get a loan from them. Their concern is if you can’t pay other debts on time or at all, why should they think you’ll pay them?
As we said, yes, you can get a personal loan if if you’re credit score ain’t so hot. But you’ll pay a price for that.
First, interest rates are going to be higher than on personal loans for those with higher credit scores. The higher interest rate is part of how loan companies can justify the risk of making these loans.
Also, they tend to be shorter term loans. The average ranges from around just a year to about 5 years.
To get an emergency personal loan with a bad credit record, the first thing to do is to look local. See if there is a bank or a credit union who may give you the loan.
If so, you’ll likely need to pay them a visit. Yes, in-person. You need to convince them that you are creditworthy. So, dress nicely and flash that winning smile… every little bit can help 😉
You will also need to prepare a lot of documents to prove that despite your credit score, you are worthy of a personal loan. These documents may include the following:
Within the course of interview, your interviewer may ask you different questions that involves the topics such as:
This means that you need to prepare how to answer these questions as best as possible.
But local is not the only option these days. There are a number of online lending institutions who will give personal loans to those with low credit scores.
One of the more highly rated companies that offer these loans is Upgrade. Others to check out include Avant, Universal Credit and LightStream.
There are a lot of bad eggs in the lending game. So be sure you do your homework here and work with a company that has a good reputation.
So watch out for things like lenders who will give you a loan without doing a credit check. That may sound nice but it’s a big red flag and you should probably look elsewhere.
The list of companies above are generally well regarded and that list is a good starting point for your research.