F
inding a personal unsecured loan, with bad credit will take a little creative thinking. Banks have been denying personal loans to consumers at staggering rates since the credit crunch of 2008.
Personal unsecured loans are a higher risk to lenders because no collateral is involved. The lower your credit score, the more likelihood the interest rate on an unsecured personal loan will be high.
The higher your credit score the better chances for approval. For this reason it may be a good idea to review your credit prior to applying for a personal loan.
However, if you cannot wait to rebuild your credit keep the below ideas in mind when shopping for a personal loan.
What’s your Credit Score?
Get the credit scores most lenders use, the FICO credit score. Equifax and Transunion allow you to purchase the actual credit score used by most lenders when determining approval or denial of a personal loan. You will save yourself a lot of time and minimize credit inquiries by knowing your credit score before applying for a loan.
Most lenders will let you know the minimum required credit score to get a loan. You can actually call a lender and ask what is the minimum credit score they look for to approve a loan and while you have them on the phone, politely ask which of the three credit bureaus they use.
Most lenders will pull your credit report from one or two credit reporting agencies. However, there are some lenders who may run a merged report from all three credit bureaus. Do not be surprised if your credit score varies from credit bureau to credit bureau. If possible apply with the lender that uses the credit bureau containing your highest credit score.
Try your local credit union
Most credit unions will only run one credit report in making a decision to approve a loan and it’s usually from Experian. Credit Union approval criteria is sometimes less stringent than traditional banks and their interest rates are very competitive.
Apply online for a Personal Loan
Go shopping online for a personal loan and save time as well as gas. Online personal loans can offer quick qualification. Loans up to $25,000 are available for a wide range of purposes, including debt consolidation, auto down payment, wedding, small business, home improvements, emergency or unexpected expenses. All types of credit are invited to apply online now for a personal loan.
Higher interest rate
Be prepared to accept a higher interest rate. Credit approval is so score driven that it may be difficult to get around a higher interest rate. Shopping around for the best interest rate may save you some money but keep in mind your willingness to pay a higher interest rate may actually get you the loan you need. Some lenders will look at your credit score as an opportunity to offer you their bad credit products and this may be the only way to get approved.
Friends and Family
The best way to avoid high interest costs would be a loan from friends or family. Borrowing from friends or family can save you money. You may be better able to convince your friends or family to make a loan if you have formal loan documents drawn up.
Military Personnel
Pioneer Services provides installment loans from $500 to $10,000 to active-duty and retired military personnel. They serve people with all types of credit, offering low rates to those with good credit ratings. All ranks and branches are eligible. There are no surprise fees and no collateral required. The application process is easy and the money is deposited quickly. Apply now at Pioneer Services Military Loans
Payday Loans
A payday loan may be the last resort. Payday loans can range from $100 to $1,000 depending on your State. The problems with payday loans are the astronomical interest rates. The enticing feature of payday loans is easy qualification. Most payday loans only require you have a verifiable income, a paystub and an active checking account. The loans are usually repaid upon your next payday but in some cases can be extended. Cashnet USA is a direct lender offering instant online approval. Get up to $550 Next Business Day!
Opportunity to rebuild your credit
Bad credit loans are not so terrible if the terms are within your budget and manangeable. Getting approved for a bad credit loan can be viewed as an opportunity to rebuild your credit and improve your credit scores. You must make all payments on time and if possible, pay more than the minimum due and have it applied directly to the principal. This can reduce the interest paid over the life of the loan and get the loan paid off sooner.
