Where to Get Personal Loans if You Have Bad Credit

Writer and editor - Lauren Ward | Updated on 2023-02-26

Generally speaking, a credit score below 630 qualifies as “poor.” As a result, it becomes more challenging for you to obtain loans, get an apartment or car, or lower your insurance premiums. Bad credit doesn’t have to be a death sentence, though. Read on for some ways to find lenders with flexible terms that will consider more than your credit score.

Finding Personal Loans with Bad Credit

When it comes to finding a personal loan that works for your financial needs, you must shop around first. Taking the time to get several different quotes will allow you to compare interest rates, terms, and other fees. It can also save you from digging deeper into your wallet than necessary.

If you find the personal-loan industry confusing or daunting, it might be in your best interest to hire a broker. They will leverage their knowledge and experience to find a pre-approved loan for your needs. While no loan is guaranteed, the option you’ll get with a broker will give you the highest likelihood for approval.

Last but not least, a bad credit score is not permanent. It is possible, with a little time and effort, to restore your credit score. Here are a couple of ways to do precisely that:

Ways to Improve Your Credit Score

Pay Bills on Time

In a perfect world, we all want to be able to get bad-credit personal loans with guaranteed approval. While it is impossible to guarantee a successful application, paying your bills on time can go a long way toward improving your odds. That means paying off your bills in full at the end of every month.

Paying bills on time will demonstrate to creditors and lenders that you are a reliable borrower because past payments are typically a reliable indicator of future performance. If you struggle to keep track of all your bills, try setting up auto payments or reminders on your phone or computer.

Pay Off Debts and Keep Credit Balances Low

It is one thing to pay your monthly home bills on time. Paying off your debt obligation is a whole new level. Having outstanding financial debts may hinder your ability to repay a loan. Creditors reward people for low balances and debt-free finances because repayment, in theory, is more likely.

Creditors and lenders use the credit-utilization ratio when calculating how much debt is permissible. It is a fancy way of saying the amount on your credit-card balances divided by your credit limit. For instance, if your monthly statement lists your balance at $1,000 and your credit limit is $5,000, you have a utilization ratio of 20 percent.

Financial institutions prefer when borrowers have a utilization ratio of 30 percent or less. People with robust credit scores will often have low ratios. Staying below 30 percent is essential because it shows lenders that you are capable of managing your credit and do not max out credit cards.

Only Get New Credit Cards When Necessary

You should not get a new credit card for the sake of increasing your credit limit. This notion is especially true if you already have difficulty paying off your current debts. People who get new and unnecessary credit cards leave themselves liable to overspending, developing poor financial habits, and undercutting their credit scores.

Applying for a new credit card is best suited for people who have good credit. That means anyone with a score ranging from 670 to 740. Having a reliable financial foundation will ensure that you continue to build your credit score instead of the opposite.

Don’t Close Credits You Do Not Use

We have all been there. A business offers you an excellent price for an item if you sign up for a credit card with them. If you want to capitalize on that deal, make sure not to turn around and cancel the credit card when you get home.

Having multiple lines of credit is a smart strategy to improve your credit utilization ratio. Conversely, owing the same amount of money over fewer outlets can reduce your score. Of course, make sure you are not paying annual or unnecessary fees for the credit card before applying for it.

Correct Errors on Your Credit Score

If you find errors on your credit report, get credit agencies to correct them as soon as possible. Otherwise, these errors can negatively impact your score for up to a decade. People who are actively working to rebuild their credit scores should check their reports regularly.

According to the Federal Trade Commission, you are entitled to one free copy of your credit report every year from each of the three nationwide credit reporting companies. That includes TransUnion, Experian, and Equifax. You will find instructions on each report regarding how to dispute any inaccuracies. You will need to despite any errors with each agency individually.

Lauren Ward

Lauren Ward
Writer and editor

Specializing in original, well-researched web content, including blog posts, news articles and web copy. Areas of expertise include personal finance and lending. 10 years of experience as freelance writer and working at Federal Reserve Bank of Richmond.
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