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Bad Credit Personal Loans:
How to find a bad credit loan
by Lisa Phillips
How to find a bad credit loan
by Lisa Phillips
Get Your FICO Score & Credit Report
It’s a good idea to get your credit report and scores before you begin
to shop around for a bad credit loan. You will save yourself a lot of
time and minimize credit inquiries by knowing your credit score before
applying for a loan. Find out which credit reporting agency contains
your highest score.
Research Lenders
Most lenders will let you know the minimum required credit score to get
a loan. You can actually call a lender and ask what is the minimum
credit score they look for to approve a loan and while you have them
on the phone, politely ask which of the three credit bureaus they use.
Most lenders will pull your credit report from one or two credit reporting
agencies. However, there are some lenders who may run a merged
report of all three major credit reporting agencies.
It’s a good idea to get your credit report and scores before you begin
to shop around for a bad credit loan. You will save yourself a lot of
time and minimize credit inquiries by knowing your credit score before
applying for a loan. Find out which credit reporting agency contains
your highest score.
Research Lenders
Most lenders will let you know the minimum required credit score to get
a loan. You can actually call a lender and ask what is the minimum
credit score they look for to approve a loan and while you have them
on the phone, politely ask which of the three credit bureaus they use.
Most lenders will pull your credit report from one or two credit reporting
agencies. However, there are some lenders who may run a merged
report of all three major credit reporting agencies.
The lower your credit score, the
more likelihood the interest rate on
an unsecured personal loan will be
high. For this reason it may be a
good idea to review your credit
prior to applying for a personal
loan. However, if you cannot wait
to rebuild your credit keep the
below ideas in mind when
shopping for a personal loan.
more likelihood the interest rate on
an unsecured personal loan will be
high. For this reason it may be a
good idea to review your credit
prior to applying for a personal
loan. However, if you cannot wait
to rebuild your credit keep the
below ideas in mind when
shopping for a personal loan.
Bad credit personal loans are available but will undoubtedly come with
higher interest rates. Personal unsecured loans are a higher risk to
lenders because no collateral is involved.
higher interest rates. Personal unsecured loans are a higher risk to
lenders because no collateral is involved.
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Try your local credit union
Most credit unions will only run one credit report in making a decision to approve a loan and it’s
usually from Experian. Credit Union approval criteria is sometimes less stringent than traditional
banks and their interest rates are very competitive.
Higher interest rate
Be prepared to accept a higher interest rate. Credit approval is so score driven that it may be
difficult to get around a higher interest rate. Shopping around for the best interest rate may save
you some money but keep in mind your willingness to pay a higher interest rate may actually get
you the loan you need. Some lenders will look at your credit score as an opportunity to offer you
their bad credit products and this may be the only way to get approved. You may want to consider a
secured credit loan in order to lower your interest rates.
Opportunity to rebuild your credit
Bad credit loans are not so bad. Getting approved for a bad credit loan can be viewed as an
opportunity to rebuild your credit and improve your credit scores. You must make all payments on
time and if possible, pay more than the minimum due and have it applied directly to the principal.
This can reduce the interest paid over the life of the loan and get the loan paid off sooner.
Consider social lending
Prosper is a website where borrowers and lenders meet. It was created to make consumer lending
more financially and socially rewarding. Prosper is a viable alternative to traditional bank loans and
they accept borrowers with credit scores as low as 520. It has been called "an eBay for loans". You
can get your loan request bid on by several lenders. Loans are made from $1,000 to $25,000.
Lenders search for loan listings based on the borrower's credit, debt profile, and group affiliation.
Lenders bid on listings by indicating a minimum rate they are willing to accept. More on social
lending and peer to peer loans.
Friends and Family
The best way to avoid high interest costs would be a loan from friends or family. Borrowing from
friends or family can save you money. You may be better able to convince your friends or family to
make a loan if you have formal loan documents drawn up. A fairly new website can aid you in this
process. Virgin Money structures formal loans between friends and family. It is a person to person
lending service that manages the personal loans you make with people you know. Virgin Money can
also report loan payments to the alternative credit reporting company, PRBC. Learn more about
Virgin Money.
Most credit unions will only run one credit report in making a decision to approve a loan and it’s
usually from Experian. Credit Union approval criteria is sometimes less stringent than traditional
banks and their interest rates are very competitive.
Higher interest rate
Be prepared to accept a higher interest rate. Credit approval is so score driven that it may be
difficult to get around a higher interest rate. Shopping around for the best interest rate may save
you some money but keep in mind your willingness to pay a higher interest rate may actually get
you the loan you need. Some lenders will look at your credit score as an opportunity to offer you
their bad credit products and this may be the only way to get approved. You may want to consider a
secured credit loan in order to lower your interest rates.
Opportunity to rebuild your credit
Bad credit loans are not so bad. Getting approved for a bad credit loan can be viewed as an
opportunity to rebuild your credit and improve your credit scores. You must make all payments on
time and if possible, pay more than the minimum due and have it applied directly to the principal.
This can reduce the interest paid over the life of the loan and get the loan paid off sooner.
Consider social lending
Prosper is a website where borrowers and lenders meet. It was created to make consumer lending
more financially and socially rewarding. Prosper is a viable alternative to traditional bank loans and
they accept borrowers with credit scores as low as 520. It has been called "an eBay for loans". You
can get your loan request bid on by several lenders. Loans are made from $1,000 to $25,000.
Lenders search for loan listings based on the borrower's credit, debt profile, and group affiliation.
Lenders bid on listings by indicating a minimum rate they are willing to accept. More on social
lending and peer to peer loans.
Friends and Family
The best way to avoid high interest costs would be a loan from friends or family. Borrowing from
friends or family can save you money. You may be better able to convince your friends or family to
make a loan if you have formal loan documents drawn up. A fairly new website can aid you in this
process. Virgin Money structures formal loans between friends and family. It is a person to person
lending service that manages the personal loans you make with people you know. Virgin Money can
also report loan payments to the alternative credit reporting company, PRBC. Learn more about
Virgin Money.
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