While obtaining a personal loan when you have bad credit is by no means easy it can be done. It is also true that obtaining a personal loan prior to the recession of 2007 was much easier. After the country’s financial system crashed lenders began to tighten up loan requirements. Today however these requirements are thankfully easing. Having bad credit does not automatically bar you from a personal loan, and these tips can help pave the way to that personal loan you are after.
Turn to a friend:
This can be rather difficult for most, but if you have a relative or close friend with good credit who is willing to co-sign a loan your chances of obtaining the loan greatly improve. You should not do this lightly as many a relationship has been torn apart over stiffing someone on a debt. If your friend or relative co-signs for your loan they will be just as liable as you for the debt and their credit score can be damaged if you even miss a single payment. You will need to commit to making payments on time for the lifetime of the loan.
If you work has a credit union you should consider joining it. Credit unions have slightly lower credit standards than most banks do. Even if you do not need a loan now you may require a loan later on. You will need to open a credit union savings account with the credit union in order to ever get a loan through one, with one notable exception. The only exception is if your workplace does business with that credit union, in which case the credit union can be guaranteed their money through a direct withdrawal on your paycheck, and this can be set up through your workplaces HR department.
The bank you already do business with:
While no bank will ever owe you a loan many banks will relax their loan standards for long time customers. This works more often in cases where the borrower has both a savings account and a checking account with the bank, as well as investments with the bank such as CDs. The main advantage here for the bank is familiarity with you and keeping a current customer happy.
Know your credit score:
You should know where you stand as far as your credit score goes. You should also take a look at all 3 of your credit reports and look for any inaccuracies. Upwards of 1 in 4 reports had errors so serious that people were denied credit. Recently the laws have changed making the dispute process easier for credit report errors so it is worth filing a dispute with the credit reporting agencies that have any errors shown on your credit report. If your score is below 580 you may have a real difficult time even obtaining loans designed for those with bad credit, other than a payday loan. If your score is below 580 you may need to spend some time raising this score before you can apply for a standard personal loan.
You can often find lenders that deal with those with bad credit online. Our website is one such resource. You should however check for any complaints against any company that offers bad credit personal loans as many of these companies that lend to people with bad credit take advantage of those desperate for a loan. A good lender will not have many if any complaints with the Better Business Bureau. Before filing out any loan application online you should always speak to a live person to get a feel for the company you are planning on doing business with.
If you are desperate enough it is an option. Just be prepared for obscene interest rates and the potential to need to roll the loan over one or more times. Payday loans are some of the highest interest rate loans you can find and these loans are often blamed for keeping those with poor credit in a cycle of debt.