Personal loans can be a great way to pay for many of life’s significant expenses, including travel, weddings, home improvements, and even large purchases you don’t want to put on a credit card. But getting approved for a loan and obtaining a favorable interest rate when your credit score is less than ideal can be challenging. Show
A bad credit score is typically anything below 600. If your score is less than that, it’s likely you’ll experience some difficulty getting approved for borrowing, and in cases when you do receive approval, you may not be offered the most competitive interest rates. But that doesn’t have to be the case. With a bit of advance effort and by shopping around, it is possible to get a personal loan with subprime credit. 5 ways to get a personal loan with bad creditGetting approved for a personal loan when you have bad credit is not out of the question. But you can improve your odds of success—and maybe even the interest rate you’re offered—by following some of the steps below. 1. Check your credit “The best thing you can do is make sure your credit is in as good of shape as possible before applying,” says Barry Rafferty, senior vice president for the personal finance company Achieve. “That starts with checking credit reports to make sure everything is accurate and in good order. Why? Because the information from credit reports is what goes into calculations for credit scores.” 2. Compare your options
3. Get prequalifiedGetting prequalified with several lenders is another important part of the process when you’re seeking a personal loan with bad credit. By shopping around, you’ll develop a better picture of the rates and loan terms you might qualify for. “Different lenders will offer different advantages to prospective borrowers. Each will have different rates and also different ways of working with customers,” explains Rafferty. In fact, some lenders that specialize in working with borrowers who have lower credit scores may consider a variety of other financial factors in order to help you qualify for a loan. These may include your income, employment history, and even your educational background. “Getting a personal loan is not just about credit scores,” Rafferty adds. “Additional items, including amount of overall debt one holds, debt-to-income ratios, and income, can influence whether a consumer is approved for credit and the rate that they qualify for.” 4. Find a cosignerFinding someone who’s willing to cosign a loan for you is another way to increase your odds of approval. “A cosigner who has an excellent credit profile and score can help an applicant in securing a loan and at a good rate, because it means both the applicant and cosigner are legally responsible for paying the loan back,” says Rafferty. “The cosigner serves as backup in case, for some reason, the primary applicant cannot make a payment.” When searching for a cosigner, it’s important to find someone who not only has a good credit score on their own, but is also someone you have a good relationship with and can trust. If you fail to repay the loan or fall behind on payments, your cosigner will be responsible for meeting the payment obligations. 5. Apply for the loanOnce you’ve selected the lender you would like to work with, it’s time to apply for the loan. The documents required for application typically include W-2s, paystubs, tax returns, Social Security number, and more. Each lender may have slightly different documentation requirements. Additional considerations when opening a bad credit loanBefore making a final decision on a loan, it’s important to consider the full picture—which includes the monthly payment amount, total interest costs, and all of the fees that are often included within the fine print.
The takeawayHaving less than ideal credit does not rule out being approved for a personal loan. Reviewing your credit score and taking steps to improve it before applying, and shopping around with multiple lenders are just some of the steps that can help improve your approval odds. But it’s also important to avoid predatory lenders offering title loans or payday loans that come with exorbitant interest rates and extremely short repayment timelines. What are the easiest loans to get with bad credit?The easiest loans to get approved for with bad credit are secured, co-signed and joint loans because you can use collateral or another person's creditworthiness to make up for your bad credit score. Payday loans, pawnshop loans and car title loans also are easy to get, but they're extremely expensive.
Which loan company is best for bad credit?5 Best Bad Credit Loan Companies of 2022. BadCreditLoans: Best overall.. CashUSA: Best for installment loans up to $10,000.. PersonalLoans: Best for personal loans up to $35,000.. Upgrade: Best for low APRs.. Avant: Best for flexible repayment terms.. What is the easiest loan to be approved for?The easiest loans to get approved for would probably be payday loans, car title loans, pawnshop loans, and personal installment loans. These are all short-term cash solutions for bad credit borrowers in need.
Can I get a loan with credit score of 500?Getting a loan with a credit score of 500 can be difficult and expensive. Sometimes though, people need to borrow regardless of whether they have good credit or not. It is possible to qualify for a personal loan with a credit score of 500; make sure to compare offers to get the right loan for you.
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