People with bad credit face a major stumbling block when it comes to getting approved for a personal loan. Banks view you as a high risk for default and will just flat out deny you.
What’s left? Payday loans have filled the gap for many people because there are so few options. But there are several problems with payday loans.
First, the amount you can borrow is typically under $400. But that’s not the biggest problem. Payday loans typically offer about two weeks of credit, due in full on the borrower’s next payday, at annual interest rates of around 400 percent. While the payday loan is a small dollar loan it can leave borrowers indebted for months.
If need a bad credit personal loan for an emergency, a down-payment, repairs, debt consolidation, home improvement, vacation or something else, you don’t have to get stuck with a payday loan. Here are 3 tips to get a personal loan with bad credit.
Online Lender. People with bad credit had few choices for personal loans, until now. Springleaf is an online lender designed for people with imperfect credit. Loans are available from $1,500 up to $25,000 with repayment terms ranging from 12 to 60 months. These loans are designed to help people with bad credit rebuild their credit scores. Monthly payments are reported to the three major credit bureaus, Experian, Equifax and Transunion. With Springleaf you don’t have to settle for a high interest payday loan. You will not be charged application or pre-payment fees if you decide to repay your loan early.
Try a Credit Union. Credit unions are nonprofit organizations that are owned by their depositors, not stockholders. Most offer exactly the same set of financial products as a bank but the emphasis is on helping depositors, not making money for stockholders. Consider applying for a loan through a credit union. Many credit unions have less stringent loan eligibility requirements and may be willing to work with you when you have a low credit score. Visit findacreditunion.com to locate a credit union near you and give them a call to discuss getting a personal loan.
Get a Peer to Peer Loan. Peer to peer or P2P lending is an online platform that allows you to borrow directly from an individual instead of from an institution. Peer to peer lending has been around since 2005 and is growing in popularity because it’s a streamlined process. Borrowers post a loan listing that includes the amount they want and why they want it. Investors review loan listings to decide if they want to invest. A borrower can have one investor or multiple investors. Your credit score is an important factor but not the only factor. An individual investor may be more empathetic to your situation than a traditional bank.
While getting and repaying a personal loan on time will definitely help rebuild credit scores, it is not the only action you can take. Order your free credit reports from all three major credit bureaus at annualcreditreport.com and correct any errors that might be hurting your credit scores. You will also improve your credit scores by paying all bills on time and not using too much of your available credit if you have credit cards.
Disclaimer: This content is not provided or commissioned by any credit union or lender. Opinions expressed here are the author’s alone and have not been reviewed or endorsed by a credit union or lender. This content was accurate at the time of this post, but loan terms and conditions may change at any time. This site may be compensated through the lender Affiliate Program.