Poor credit could be the consequence of bad planning, bad circumstances, or both. There could be myriad causes. But the unfortunate result is that when you need to borrow money, you’ll find yourself facing an uphill battle to convince lenders that you’re not the risk you look like on paper. That said, getting a personal loan when you’re coping with bad credit is not impossible. And there are several steps you can take to improve your odds of not only getting approved for a loan, but securing more or less favorable terms in the process. Here are some steps to get the funding you need.
You really need to start by addressing credit issues, and this begins with ordering your free credit report online. When you have this report you can see both your current credit score and the black marks that are dragging your numbers down. What you may find is that there are errors in reporting. For example, bills that you have paid may still show as owing, in which case your creditors have not reported your payment. You can clear these negatives from your credit report by calling the offending lenders to request that they update your payment status with credit reporting agencies. This could boost your credit score immediately. You can also see if there are smallish bills you can pay off to remove them from your credit report before you start applying for loans, lowering your debt-to-credit ratio.
From there you can start comparison shopping for loans. You might be tempted to leap at the first lender approval you receive, but you’re better off taking the time to compare several offers so that you can get the most favorable terms for interest rate, repayment schedule, and so on. Of course, you might not get approval from any of the lenders you’ve spoken with. In this case, there are further steps you can take to secure the loan you’re seeking.
You could start by offering up something of value as collateral. Items such as your car could be used for a title loan, for example, or you might be able to take out a home equity loan (although you don’t necessarily want to put your house on the line for personal expenses). Other valuables like jewelry and art may also suffice, although it will depend on the lenders and what they are willing to accept. If you have nothing of notable value, you could also see if a family member or friend will co-sign for a loan, using their good credit for your benefit. But keep in mind that a failure on your part to repay could put your loved one’s credit rating at risk. So do not enter into such an agreement lightly, especially if you think there’s any chance that you may not be able to repay the loan (in which case you shouldn’t take one out anyway).
Finally, you can consider alternative lenders. Most people start their search for funding by applying for a bank loan. But you could also check in with area credit unions that are dedicated to working with the local citizenry in ways that national or international banks are not. You could also look into lenders like InstaLoan that specialize in offering personal or signature loans. They may be more willing to help you find a workable solution than other types of lenders. In other words, get your ducks in a row and then shop around. When you take your time and keep an open mind, you can find the personal loan you’re seeking, even with bad credit holding you back.