How to Get a Personal Loan Even with Bad Credit
The word bad credit might seem to be a negative term especially for lenders. This usually signals a red flag that will lead them to scrutinize or even reject a borrower with such record. If you’re one of them, it’s a natural reaction that you worry about this.
But, don’t you know that you’re not alone? The 2016 Credit Bureau Experian statistics revealed that nearly a one-third of Americans and US Citizens have a poor or even bad credit scores ranging from 300 to 600 points. Moreover, a bulk 26 million Americans even have no credit scores at all. These populations have their credit files too thin to even attain a score.
Not all who has a bad credit means they’re purposely running away from their indebtedness. There might be some deeper logic as to why you’re trapped to a bad credit and one valid reason is you’re in dire need of money to fix a major home improvement or payout hospital bills that getting a personal loan is the only solution.
Whatever the reason it may be, this article will give you guides on how to get a personal loan despite having a bad credit.
Find a Co-Signer
If a personal loan is badly needed and you are aware that you might be disapproved, find a generous friend or family member who’s willing to act as a co-signatory to your loan application. Make sure that you choose the one with a good credit score that can cover up for your bad credit.
This might be risky to the one who’ll submit his/her signature and guarantee to back up your loan, but you just need to win the trust and confidence that you’ll wholeheartedly pay the loan when due. Keep in mind that not obliging to the loan terms will also affect your cosigner's credit score.
Focus your financing company hunting only to those who allow a co-signer to a personal loan.
Work with the Lender
There are now more ways to borrow money aside from the banks. There are lenders who can do anything just to have your loan approved. You just need to be willing and cooperative with them. Here are some insights when you deal with a licensed money lender:
- Lay down all your cards for them to get all the information they need – Choose lenders that are reputable so you’ll not worry and feel unsafe on giving out even sensitive information about you such as your Social Security Number.
- Honesty is the best policy – Do not neglect on giving out some very useful information especially on why you had a bad credit. They will help you obtain the loan, so it's their right to be given out only truthful data.
- Suggest – Since you’re dealing with them, voice out your concerns on interest rates, payment terms, or even having more confidence in having a co-signer. They will, of course, inform you what’s negotiable and what’s not.
If you succeed in doing so and the lender prepared your loan agreement, carefully read the terms and conditions of the loan. Make sure that this is agreeable at your end and that all the important terms are clearly stipulated. Don’t be afraid to ask questions.
Consider Peer-to-Peer Lending
Sometimes known as crowdlending, this is the process of lending money to individuals or even a business through online services that matches the borrowers to the lenders. P2P lenders are most likely to be more accommodating than banks and financial institutions.
Lending platforms such as the Lending Club and Prosper Do are open to lending to a borrower with bad credit, though they maintain only a certain score to be approved (600-640 points). An extreme bad credit might be denied the loan.
But, you will be charged with the risks these lenders are willing to take. Higher than the usual interest rates will be offered plus origination fees that are equal to as much as five or six percent of your loan amount will be collected.
The Bottom line
When carrying a bad credit, a thorough research needs to be done before you apply for any kind of personal loan. Researching will give you useful information so you’ll be able to make a sound decision.
And always believe that it's never too late to change. You can always choose to rebuild your credibility and build up your credit scores through proper coordination with your lenders.
Who knows, the next time you urgently need a personal loan, you are already capable of getting it without the worry of being denied.