Unfortunately, emergencies happen when you may not have the cash on hand. Maybe your car needs repaired or you get hurt and receive an unwanted medical bill.
If you’ve missed some payments or have accounts in collections, you might wonder, “Can I get a loan with bad credit?”
If you’ve got bad credit, meaning your score is 580 or below, you can run into problems if you need to borrow money. Some lenders won’t lend to you at all, while others might not give you enough money or charge you too much interest.
The good news is there are some steps you can take to find a willing lender and improve your credit situation for the future. Read on to see some tips about getting a loan with bad credit.
Begin Rebuilding Your Credit ASAP
Whether you need your loan now or in the future, it’s crucial to begin resolving any problems like collections accounts and pay down outstanding debts.
Although your credit score may not jump a lot immediately, getting a loan with bad credit will become easier. However, you’ll likely have to be willing to pay a higher interest rate and borrower a smaller amount than you’d prefer.
You might also find that getting a secured credit card and paying off your balance on time each month will help start improving your credit, especially if you have little history.
Find Lenders That Allow Lower Credit Scores
You can find many bad credit lenders online who will let you borrow money with bad credit. Sometimes, these lenders don’t do a credit check at all.
These loans do have minimum income requirements and may require that you use direct deposit for your paychecks. You may be able to get a few thousand dollars and a loan term of a few years.
Traditional banks may also offer you a secured loan. This means that you put something up for collateral, like your car or money from a bank account, in exchange for borrowing funds.
One thing to be aware of, though, is to avoid predatory lenders that take advantage of your bad credit situation. These lenders might offer you quick cash in exchange for high-interest rates or give you money using your vehicle title as collateral.
Consider a Co-Signer
The best way to get a loan with bad credit and get more favorable loan terms is to find a co-signer. This means having a family member or close friend agree to take on the loan if you fail to pay it back.
Since the co-signer’s credit history is considered in the loan approval process, you can get a better interest rate. You might also get a higher loan amount and longer loan term.
The downside, though, is others may be reluctant to agree to co-sign for you if you have a history of bad credit. They might not want the added risk and responsibility.
Look for Alternative Loan Options
You can also consider other loan options like using buy now pay later financing programs or borrowing money from friends and family.
The buy now pay later programs are a popular option for making large purchases of electronics and furniture. These programs may bypass a credit check or not put much weight on a bad credit score. However, you’ll still likely pay more in interest with a lower score unless you find some no interest programs.
If you’ve got friends or family who are willing to lend you some money, this can save you in interest charges. Your contacts likely won’t check your credit, but they’ll want to know you’re responsible enough to pay them back. If you’re lucky, though, you can borrow funds interest-free from them.
Yes, You Can Get a Loan With Bad Credit!
Now that you know how to get a loan with bad credit, it’s time to reach out to lenders to learn more about their requirements and loan terms. Don’t hesitate to get quotes from multiple options so you get the best deal.
If you do have someone willing to co-sign for you or lend you money, definitely take them up on the offer since you’ll likely have more favorable loan terms that way. Remember the risk that you’re putting your relative or friend in, though!