Having bad credit can make it difficult or nearly impossible to get approved for a loan. Creditors will look at your credit history and might not like what they see and refuse your loan.
A FICO score of less than 580 is labeled as poor credit, and studies have shown that consumers with poor credit scores are more likely to become delinquent on an account. Despite the obstacles, there are still some ways to get online loans, even with bad credit.
Use A Cosigner
If your own credit is too poor to get a personal loan, consider using someone else with good credit as a cosigner. Usually, this person is a close friend or family member who agrees to make loan payments if you default on it. Some banks, like Citizens Bank (NYSE: CFG), will accept cosigners. Using their good credit history can help to offset your poor history, which will then increase your approval chances.
Some lenders do not accept cosigners. If you're having trouble meeting the minimum income requirements, you can see if the lender will consider spousal income.
Get Quotes From Bad Credit Lenders
If you're unable to get a cosigner, then you can try applying for loans from lenders that offer loans to people with bad credit scores.
A lender like OppLoans will approve people with a FICO score under 600 for a personal loan.
Get A Secured Loan
For those with low credit scores, one of the best options available to you for obtaining a loan might be a secured loan. This type of loan allows you to borrow against an asset like a car with a car equity loan, savings or CDs, a retirement account, or home equity with a HELOC.
Your bank might offer this type of loan, and credit unions will often allow members to rebuild credit through savings- or CD-secured loans.
Rebuild Your Credit
If your score is 550, you are close to having a “fair” credit score of 580. It might take some time to improve your score, but if you get started today, you might see a difference, making it easier to get approved for loans in the future.
Review your credit score and report and make sure there are no errors that might be lowering your score. Ensure that all monthly bills are paid on time to start seeing your credit score improve.
If you don’t have a credit card, you can apply for a secured credit card, which will accept people with low or bad credit scores. Using your credit card wisely and making on-time payments can help your score rise over time.
If you desperately need a loan, make sure to do your research. Don’t sign up for a loan just because you need cash now if the interest or payments are too high for you to pay back feasibly. Take your time to research your options and don’t borrow money unless you can afford to.
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