Getting a Loan With Bad Credit Isn’t Impossible
If you’ve ever experienced financial problems and had your credit scores crushed or if you’re trying to build credit for the first time, it can be really difficult to get a loan. But, just because you have bad credit doesn’t mean you can’t buy a new car or get a cash advance to help pay those unexpected medical bills.
Having no credit or bad credit makes you a high-risk customer who might default on the loan and leave the lender stuck with the losses. Because you’re considered high-risk, no matter how responsible you are with money now, it can be really difficult to qualify for a loan. Until you are able to raise your credit score, you’ll have a hard time meeting the standards and large banks and credit unions set and have to follow. But bad credit doesn’t mean you can’t get a loan, and it doesn’t mean that the loan you get will blow your budget with an incredibly high APR.
Like so many other things in life, “bad” is a matter of opinion. What one lender considers “bad” is perfectly acceptable for another. If your credit score is borderline, some lenders might still consider you a great prospect, while others (who have different criteria) consider you a bad apple and more risky.
When it comes to getting loans with bad credit it’s best to shop around. Don’t just settle with the first bad credit loan lender you find with an attitude of “just give me a loan.” Shop around. There are still deals to be found … even for very bad credit loans.
If you have less-than-perfect credit, here are a few things you can do to get approved for bad credit loans online:
- Don’t Assume the Absolute Worst. Don’t take your mom’s word that your credit is bad. Take a few minutes to pull your free credit reports and then pay the few dollars for your FICO credit scores. Even candidates that have the same credit might not be treated the same in the eyes of a lender. Even if your credit history is tarnished, you may have a better chance of getting a bad credit loan than someone who has the same score and no credit history.
- Shop Around. Different lenders will see your low or bad credit in a more positive light than others.
- Don’t Do It Alone. Ask someone to help you find the right loan for bad credit. It helps to have a second set of eyes to look over the loan terms to make sure you know exactly what you’re agreeing to before you sign the papers.
- Shop Loan Terms. Don’t get distracted by the low monthly payments a lender promises. Look for the cheapest money available – that’s the lowest APR over the shortest time period. Don’t sign up for a 7 year car loan because the payments are cheaper that way. You’ll end up paying more in the long run. If you need 7 years to pay for a car, then you can’t afford the car.
- Watch For Add-Ons. Some lenders take advantage of people getting a loan for bad credit and add on all sorts of nonessential services to your contract. Things like extended warranties, insurance and after-market services aren’t essential to your loan. So keep your eyes peeled and make sure you tell them “no” to those types of extras.
A lot of online lenders offer quick loans with no credit check required and guaranteed approval. Remember, your credit doesn’t have to stay bad forever. Once you qualify for bad credit rating loans, you can start building your credit again. Make sure you make your payment on time every month and if possible, pay a little extra so you can pay the loan off early. Doing those small things will start building your credit and make it easier to qualify for better loans in the future.