How to Get a Personal Loan With Bad Credit

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Point of Interest

Just because you don’t have great credit doesn’t mean you don’t have unexpected needs for fast cash. A personal loan may still be an option, even with bad credit.

Life’s financial emergencies and unexpected expenses don’t care if you have good or bad credit. There may be times when someone with less-than-great credit may need access to fast cash through a personal loan. Some of these instances might include unexpected medical bills, a much-needed home repair, moving costs or debt consolidation. The good news is many lenders are willing to work with borrowers that don’t have the best credit.  

How to get a loan with bad credit

Getting a personal loan with poor credit is not as easy as with good credit, but it is certainly possible thanks to several lenders willing to extend a helping hand. What you’ll need to do is take the time to research several lenders to see what their eligibility requirements are for unsecured personal loans. Many lenders will have this posted on the company website front and center or in the FAQ section. If the information is not readily available, you can always send a quick email or give the company a call to find out.

When you find a few potential options, go through the pre-approval process to see if the lender is willing to work with you and what rates and repayment terms you may be offered. For most lenders, this process only takes a few minutes online and can give you a better picture of your final approval odds.

How to improve your credit score before applying

  1. Check your current credit report for errors. The credit bureaus are not perfect, and, often, people have problems listed on their credit reports that are not correct. Take the time to make sure you’re getting credit for the good things you’ve done and not getting punished unfairly.
  2. Dispute any errors you find. If you identify any discrepancies, dispute them through the credit bureau. Generally, consumers have success getting errors removed from their reports, which will raise your credit score.
  3. Link your credit account to available boosters. Some of the reporting bureaus are releasing products that can link your bank account to your credit report, which can help to boost your score immediately. These products are free and can offer a quick boost that is especially important if you’re close to approval.

How a personal loan can improve your credit score

If you’re able to get a personal loan with bad credit, this is also an opportunity to use that loan to raise your credit score for the future. By making on-time payments and fulfilling the obligations of your loan, you will be demonstrating to the credit bureaus good borrowing behaviors. Over time, this is going to increase your credit score by adding to your credit mix, increasing the length of your borrowing history and building a better history of on-time payments.

Alternatives to bad credit personal loans

If you’re unable to get a bad credit personal loan, you are not completely out of options. You have several other borrowing options — some good and some not so good. For good options, you may be able to get a credit card, borrow from family or friends or even take out a payday alternative loan (PAL) backed by the federal government.

Credit cards

Each of these options comes with its own set of pros and cons you should educate yourself on before borrowing. Credit cards will give you access to a revolving line of credit, which means you can keep reusing the borrowed money as many times as you need without reapplying. You can also work up to a higher credit borrowing limit as you make on-time payments, which will give you more flexibility. 

Family and friends

Borrowing from family and friends is an option if you have someone willing to extend a helping hand. Be wary of souring a relationship over money, though. Approach borrowing from friends and family with the same caution and respect you would borrow from a professional lender. 

Payday alternative loans (PALs)

PALs are some of the easiest loans to acquire and can be set up through an approved credit union lender. These loans are designed to be a safe alternative to payday loans and are designed to help those in the greatest need. If you’ve had no luck with any of the other options on this list, reach out to a participating credit union to apply for a PAL. 

Auto title loans

On the other side of the aisle, you may have seen a few tempting options like auto title loans. With an auto title loan, your car is your collateral. This means that if you aren’t able to make your payments, you stand to lose your car. 

Traditional payday loans

Payday loans are predatory lending tools that take advantage of people in dire need of cash.

The final word 

Remember that it is possible to get a personal loan, even if you have bad credit. However, getting a personal loan with bad credit usually ends up being more expensive, as lenders see borrowers with bad credit as more of a risk. But if you make on-time payments and