Can I Get A Loan With Bad Credit?

Your credit score plays a critical role when it comes to applying for a loan. Lenders believe that lower credit scores correspond to a higher likelihood that you will miss a payment in the future. In other words, they believe that individuals with bad credit are risk borrowers. To mitigate the risk of lending to someone with bad credit, most lenders will charge relatively higher origination fees and interest rates. They may also have a minimum credit score requirement, and you could be denied a loan outright if your credit score doesn’t make the set cutoff. So, does it mean that it is impossible to get a loan with bad credit? The answer is no because some lenders consider much more than the credit score when reviewing your loan application. Other factors that may determine whether or not you get approved for a loan include your current income, history with the lender, and outstanding debt. In this post, we discuss how you can get a loan with bad credit. Read on to find out everything you need to know.

1. Borrow from Family or Friends

Borrowing from family and friends might be dangerous from a relationship point-of-view, but it makes a lot of sense as long as you are sure you will repay the loan within the agreed timeframe.
Family and friends will not put you through a grueling qualification and approval process. They will also cut you some slack on the interest rate.
However, before you borrow from family or close friends, think about what might happen if you default. Keep in mind that failing to repay a loan to a family member or close friend will strain your relationship in ways that go beyond a bad credit report.
Make sure you treat the loan just like any other business transaction between you and a stranger. Don’t let the relationship cloud your judgment and make you believe that you can default without consequences.
Create a written agreement on the loan terms and interest rate and what will happen if you default.

2. Get Advance on Your Paycheck

If you are employed, you can apply for a payday loan on your paycheck without any issues. A payday loan is a typical example of a loan with bad credit because the lender isn’t interested in your current credit scores. He/she is only interested in your ability to repay the loan amount and accrued interest.
Although some payday loans may be a little bit expensive, some online lenders will give you a cash advance on your paycheck for a small or no fee. The application process is usually simple, and you can access the fund on the same day or next business day.

3. Get a Cosigner

The other option you have if you want a loan with bad credit is finding someone with a good credit rating and requesting him/her to serve as your cosigner. With a qualified cosigner, the lender will determine the loan terms and interest based on the cosigner’s current credit rating, and he/she will also be responsible for repayment.
In such a case, repayment information will be recorded on both your credit report and that of your cosigner.
So, if you default or fail to make payments on time, both of you will suffer. However, if you stick to the repayment schedule and make all payments on time, your credit score will improve, making it easier to access loans without a cosigner.

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