Is your credit score in bad shape? Don’t let a low score deter you from seeking loans for bad credit.
Plenty of reputable options exist to make sure you can get the money you need when you need it.
Take a look at some lending solutions if your credit score is not so hot!
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Where to Start With Loans for Bad Credit
Poor credit scores tend to be those that are below about 650. Credit scores are assigned on a scale from 300 to 850. Say you want to take out a loan to buy a home or car – the person with the higher credit score can save thousands of dollars on their loan!
The moral of the story is to keep working on your credit score and in the meantime find a quality lender. Use a loan calculator available online to calculate your score and see where you stand.
Even if the banks turn you down, there still are lenders willing to do business with you. And do remember that this is a business, meaning that you’ll have to pay back the loan plus interest. Interest rates can be an expensive pain if you don’t do the math on how much they will add up.
Credit Unions As a Solution
Most major cities – and even small ones – have credit unions that can provide loans for bad credit.
Unlike banks, credit unions are non-profits and many are perfectly happy to do business with someone who has a low credit score if that person seems likely to pay it back. Yes, there’s a little bit of a judgment call going on here, but that can work to your advantage. Credit unions tend to be pretty invested in their communities, so if you are too, you may have an in.
Expect reasonable rates and friendly service. Even better, the interest rate on a loan cannot exceed 18% (versus other lenders who can top 50%).
Loan Aggregators and Personal Loans
Loan aggregators source a bunch of lenders to give you multiple options with varying fine print on repayment plans. Many can be used free of charge and allow you to survey the lending landscape before moving forward. Some lenders will let you do everything online – you just have to know where to find them.
Personal loans can be both secured and unsecured. With unsecured loans, the lender just gives you the money without any fuss. If that sounds too good to be true, it might be if your credit score is exceptionally low.
Lenders offering secured loans will ask you to put up some sort of collateral (e.g., your car) before they hand over the money. The big drawback, of course, is that if you can’t repay a loan, you have to forfeit your collateral. So, proceed with caution!
Lending Situations to Avoid
Not all lenders have the same motive of helping you get back on your feet. Some are far more interested in taking advantage of you and slapping high-interest rates on the loan amounts.
Watch for high-interest rates, which are especially common in payday loans. Experts from Pew Research put the typical payday interest rate at 391%. Yikes!
It Will Work Out
Even if the banks turn you down, there still are plenty of loans for bad credit. Work on getting that credit score up, and you can come back here to find fun excursions and tips to keep making your life better!