Think for a moment about what you would do to cover the costs of an unexpected financial burden. Likely, your first course of action would be to go to the bank and apply for a loan.
However, when you have a bad credit score, the idea of getting a personal loan can seem completely out of reach, leaving you feeling hopeless and isolated.
In reality, you’re not alone. As of 2019, about 34% of Americans have either a fair or very poor credit score.
And, thanks to bad credit personal loans, you can get the money you need even if your credit score isn’t where you’d like it to be.
7 Tips for Getting Bad Credit Personal Loans
Want to increase your chances of getting a personal loan? Follow these tips for success.
1. Gather All Your Information
Lenders will want to know as much information as possible when considering whether to approve your loan request. So, before you talk to them, make sure you know your credit score, how much debt you have, how much income you make, and exactly how much you need to borrow.
The more transparent and informed you can be about your finances, the better.
2. Research Different Lenders
Lenders have different minimum qualifications and you can often find them listed online. Take the time to look into different lenders and compare their rates and terms. If they offer online pre-qualification, you can take that initial step as well.
And, since most lenders only run a soft credit pull for pre-qualification, you won’t have to worry about it impacting your credit score even further.
3. Go to a Credit Union Instead of a Bank
Often, credit unions have more flexible lending requirements compared to banks. If you’ve had issues getting a loan through a bank, hope is not lost. Research credit unions in your area and set up an appointment to talk about your options.
4. Consider Debt Consolidation
If you have outstanding debt that you owe to multiple lenders, consider consolidating all of your debt, which could lower your interest rate and simplify your monthly payments.
By doing so, you could yourself more attractive to lenders, since you’re simplifying your debt. Read more about debt consolidation to see if it’s the right choice for you.
5. Be Prepared to Show Proof That You Can Pay It Back
At the end of the day, all lenders care about is that you can pay back the money you borrow. Show up to your appointment with proof of income so you can ensure the lender that you have the means to pay back your loan.
6. Get a Cosigner
Ask a close friend or family member if they’ll consider being a cosigner on your loan. If they have a good credit score, lenders will be more likely to approve your loan request. However, make sure that you and your cosigner fully understand that agreeing to be a cosigner means that they will cover your debt if you default on payments.
7. Don’t Ask for More Than You Need
When applying for a loan, only ask your lender for exactly the amount you need to help you cover your expenses. While it might be tempting to ask for a little extra as a buffer, it increases your chances of your request being denied.
Bad Credit Doesn’t Have to Be Permanent
Remember, your credit score is constantly changing and it’s possible to increase it over time with a little work. When used correctly, bad credit personal loans can be a helpful tool to relieve financial strain and help you get on the path to better credit.