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How to receive a loan when you have a bad credit?

Estimated reading time: 2 mins

A bad credit is the scarlet letter of the financial world. No big lender is willing to borrow money to people who have a low credit score since they are not considered serious enough to pay back the money.

Before you decide to make a loan, it is vital that you find your credit score, since the lenders already know it. You can discover the FICO score by asking your bank if they provide it for free. You can also get it from FICO, although you will have to pay for it. However, the best option should be signing up for CreditKarma.com or a similar company. Here is how the credit points go:

  • 720-850 – Great credit
  • 680-719 – Good credit
  • 630-679 – Fair credit
  • 550-629 – Subprime credit
  • 300-549 – Poor credit

Generally, if your credit is under 550 you won’t really have a chance with traditional lenders. But do not despair! Even if you are in this situation you can still get a loan, although not the traditional one.

Find a different kind of loan

There are other types of loans out there, and they do not imply going to a bank. In fact, you can go online and look for long term loan bad credit no fees and you should find numerous options. However, we wouldn’t recommend to choose a payday loan. While they are small and easy to get, the interest rates are usually huge and most borrowers end in debt.

Instead, you can join a credit union. It might take a while until you obtain membership but once you do you can receive loans from them and the good news is that they don’t evaluate just your credit score. They will analyze other factors as well, such as the place where you live, your job or your school.

Secured loan

Secured loans should help you enhance your credit. For these loans you will have to offer an important asset as a collateral, and if you cannot pay the money back the asset can be taken for you. The collateral can be a car or a house, so you should be careful.

Get a co-signer

If you do want to stick with a traditional loan but you can’t get one because of your bad credit, you can try to find someone who trusts you enough to be a co-signer for you. A co-singer will take responsibility for you and if you can’t pay, that person will have to pay instead.

The risks are pretty big for a co-signer so it is difficult to find one. However, you can try asking some of your friends or loved ones.

Personal Installment lenders

A bad credit does not have to stay that way. You can always try to build it back up. Personal installment lenders can help you with that. If there is any emergency, the personal installment loan can cover the expenses or consolidate higher-interest debt. The good news is that these lenders won’t judge you solely based on your credit score, so it shouldn’t be that difficult to obtain a loan.

 

About the author /


Simon is a creative and passionate business leader dedicated to having fun in the pursuit of high performance and personal development. He is co-founder of Applied Change, a Business Change consultancy based in the UK. Simon is also an Ambassador for Gloucestershire business. Simon is an Associate Member of the Chartered Institute of Professional Development.

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