Getting a Reasonable Loan with Bad Credit 

Having less than stellar credit often seems like an insurmountable obstacle for those in need of a loan. Whether credit has taken a hit because of a recent bankruptcy or court judgment, one too many missed credit card payments, or overdoing it on credit utilization, getting access to reasonable credit moving forward isn’t always a simple process. Lenders view consumers with bad credit as a risk, given their financial track record, and they charge more by way of interest to help offset that risk. However, individuals with bad credit aren’t completely out of luck when it comes to getting a loan when they need it. Here’s how to get a reasonable loan if you have poor credit.

Start Local

Big, institutional banks and other financial institutions that offer lending products on a national or global scale aren’t your best bet when seeking out affordable financing for hefty expenses. That’s because large lenders are more focused on the numbers than they are individual consumers. If you need a loan to cover an emergency expense like a medical bill, a car repair, or another major purchase, think local first.

Local lenders, whether it be a credit union, a California title loan expert, or a small community bank, have more flexibility when it comes to lending to potential borrowers with less than perfect credit. For instance, a car title loan lender doesn’t even need to review a borrower’s credit history to approve a loan; instead, steady income and ownership of a vehicle with a clean title is all that’s required. While a credit check is required with other lenders, smaller, neighborhood banks and credit unions have the ability to look at the borrower’s financial track record with a less judgmental eye. This could mean getting a reasonable loan even if your credit history isn’t so great.

Go Online

Another option for bad credit loans is a recent addition to the lender marketplace: online loan providers. Some lenders that operate solely online are willing to allow borrowers with bad credit to use other factors, above and beyond a simple credit score, to qualify for a loan. Employment history, other assets on hand, and educational achievements may be viewed as positive attributes for a borrower working with an online lender. Compared to those with high credit scores and strong credit histories, borrowers who secure a loan through an online lender may pay slightly higher interest rates. However, if cash is necessary in a hurry, online lenders are a viable option for borrowers with low credit scores.

Get Some Help

Borrowers who do not feel confident in their ability to get a loan through one of the options listed above may consider using a co-signer. Typically a family member or close friend, a co-signer is someone who has strong credit and agrees to apply with a bad credit borrower on a new loan. The strength of the co-signer’s credit helps improve the chances of getting a loan approved and at a lower interest rate or with more favorable repayment terms. Co-signers are on the hook for payment, just like the primary borrower, so be sure to discuss responsibilities in advance of signing on the dotted line.

Getting a loan when you have bad credit may seem impossible, but knowing the options available based on your specific circumstances is the first step. Consider the alternative to traditional bank loans when you need to borrow money at a reasonable cost.