personal loans for bad credit
Even with bad credit, it’s still possible to get a personal loan.
However, you should expect a smaller pool of lenders to choose from, along with a higher interest rate.
It’s important that you choose a lender carefully, and that you have a full understanding of the loan terms you’re applying for.
Personal loans can really help you when you need it the most. You can use a personal loan to consolidate credit card debt or pay for an unexpected emergency.
So let’s look at some of your options when it comes to personal loans for bad credit.
Here’s what we’ll cover:
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These loans are offered to borrowers with poor or no credit. There’s a couple of different places you can go for a personal loan.
These are:
So who is a bad credit personal loan for?
The answer is anyone that has a credit score under 620.
A lender’s first priority is recouping their money.
Having a poor credit score shows a history of paying your debts late, or not at all. This makes you a risky client for a lender as they’re not sure if you’ll pay the loan back as promised.
Because of this, they choose to charge you a higher interest rate on your loan. This helps to compensate themselves for the risk they’re taking by lending you money.
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Aside from personal loans, you also have the option of a payday loan. This is a good choice for when you need money right away.
Payday loans will start between $100 – $500 and are secured by giving the lender a post dated check to automatically withdraw the money from your account on the day you get paid.
Besides paying the loan back, you’ll also be responsible for any additional fees related to your loan. These could range from $10 all the way up to $30 per every $100 you spend.
The requirements for these loans are:
The great thing about a payday loan is that it does not require a credit check.
So no matter what your credit score is, you can still qualify.
Be careful, though! It’s easy to get yourself into a vicious cycle of taking out payday loans whenever you need a little extra money. But, these fees will add up quickly!
Make sure you’re only using a payday loan when you absolutely need it and know you’ll be okay once the money is withdrawn from your account.
Remember that the withdrawal is automatic, so you can’t avoid paying it back!
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Payday loans come with an extremely short term. The payback amount will be automatically withdrawn from your account on the day that your next paycheck is issued.
They come with extremely high fees, and must be paid back in a lump sum.
On the other hand, personal loans are paid back through installments. So, you’ll be able to make monthly payments for the duration of the loan term.
This is extremely convenient for a lot of people because it removes the need to take out additional loans just to pay the original loan back.
By splitting your repayment into installments, you’ll be more likely to keep up with it and not fall behind again.
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Credit scores range from 300 to 850.
Anything under a 620 will make it more difficult for you to qualify for a personal loan with a larger lender.
The only way of knowing if you qualify for a personal loan or not is by actually applying. But, before you apply you might want to check your credit score yourself and see where you fall.
However, just because you check your credit score and it’s over a 620, does not guarantee you’ll be approved.
Let’s say you pulled your credit score and it’s reporting at a 630. So you go ahead and apply for the personal loan. But, when the lender pulls your credit he says that it’s only 615.
What’s with the discrepancy?
There are 3 credit bureaus, and they might all have a different score for you depending on the credit model that they use.
So while it’s a good idea to check your credit yourself to see where you stand, it is not 100% reliable for helping you figure out whether you’ll qualify for that personal loan.
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Personal loans for bad credit often come with higher interest rates because you’re considered a liability for the lender.
So, it’s important that you compare any loan offers that you’re considering.
What should you look for?
Compare the following:
If you have poor credit, you can apply for a personal loan with:
Most national and community banks will have strict lending guidelines. This means you will have difficulty obtaining a personal loan if your credit score is below 620.
Online lenders may have requirements very similar to the national banks. They will ask you for proof of income and your bank account information. So make sure to have the information on hand.
Credit unions will have the least strict requirements when it comes to obtaining a personal loan. Most credit unions will lend you money, even if your credit score is low.
Look around and see what programs your local credit union offers. These could be some of your best choices based on their favorable terms for low credit applicants.
Taking out a personal loan for bad credit can be expensive. So, you need to ask yourself if this option makes sense for you.
What should you consider?
If an unexpected expense comes up, a personal loan may be the best option for you because you’ll have access to money right away.
But, you need to consider if the amount they’re offering is either too much or too little for your needs.
If you take on too much money, it may be hard to pay back.
But not taking out enough won’t remedy your situation.
These are all things you need to carefully consider before applying for a personal loan for bad credit.
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There are two options to choose from if your application gets denied:
Research all of your options and make sure you’re making a wise financial decision.
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Below are some lenders and options you can look into and compare.
Your situation will be unique, so we suggest you review the options offered here, as well as researching on your own.
Why?
Do you have an account with your local credit union? If so, they may be willing to give you a better offer because you have an established relationship already.
Here are the 7 best personal loans for bad credit:
One Main Financial requires an in person visit to complete the application process. With more than 1,600 branches across the nation, it shouldn’t be an issue to find one near you.
They offer both secured and unsecured loans, and have an A+ rating from the Better Business Bureau.
PeerForm has an A rating with the Better Business Bureau.
Avant offers personal loans in 46 states, including the District of Columbia and has an A+ rating with the Better Business Bureau
Lending Club has a B rating from the Better Business Bureau.
Upgrade has an A rating from the Better Business Bureau.
Upstart is a great option for those with little credit history. They have an A+ rating from the Better Business Bureau.
Marcus by Goldman Sachs is a great option for debt consolidation. Their loans are available in all U.S. states and territories, besides Maryland. They do not have any origination, late, prepayment, or other types of fees. Marcus by Goldman Sachs has an A+ rating from the Better Business Bureau.
A lower credit score will limit your selection when it comes to personal loans for bad credit, but that doesn’t mean it can’t be done!
Before you apply for personal loans for bad credit, it’s important to look around and compare your options between lenders.
If you’re not pleased with the options you have, take the time to work on your credit score. By raising your credit score, you’ll also open more possibilities when it comes to qualifying for a loan.
Have you applied for personal loans for bad credit? Let us know in the comments!
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