How to get personal loans with bad credit

How to get personal loans for people with bad credit

With the economy still struggling and unemployment rates fluctuating, it’s one of the worst times in history for someone with bad credit to try to get a loan of any sort. Yet, life still goes on and needs arise. If you already have bad credit, it’s never too late to start working on improving your credit rating and one effective way is to build credit on credit cards. Using credit cards for purchases and then paying the monthly payments on time or even paying them off every two months or so will work towards improving your overall credit score. A key to this is not to max-out the credit card or cards, though, as running the balance up to the hilt is just as much of a red flag as is non-payment. Sensibly handling your credit cards will show potential lenders that although you may have had an unfortunate set-back in the past, your current credit record is one of responsibly managing your debt.

Many times it is just as difficult to obtain a credit card as it is a loan when you have bad credit. There are a number of companies now who specialize in guaranteed credit cards for people with bad credit. These companies vary in how they structure their offers. Some are considered “secured” and may operate more like debit cards, having you make a deposit equal to your “limit” and then, although you have money backing your purchases, you will still make monthly payments that will build your original deposit back up. Others are more traditional, being unsecured and not requiring a deposit, but they will charge an inflated interest rate, well above the current going rate for a typical credit card.

It is easy enough to find guaranteed credit cards for people with bad credit. Email inboxes are flooded with offers almost every day of credit cards that are assured approval. You can also use the internet to search several sites that will match a credit card and its benefits and features with your credit situation. Simply fill out a short questionnaire and these sites will present you with several choices of credit cards, secured cards, and pre-paid cards. You just review the aspects of each of them and select the one that is right for you. Most times you can get an approval within minutes when you apply for a credit card using one of these sites and be on your way to re-building your credit within days.

While attempting to build credit on credit cards using guaranteed and/or secured cards is one way to go, there are also more loan agencies now than ever before that will loan to someone with bad credit. Recognizing the difficult situation that a large number of people are in, banks and credit unions are even offering “bad-credit” loans in some circumstances. It is always worth a try to contact the bank you do business with first to see what they might be able to offer by way of a loan. These types of institutions might require collateral to secure your loan, but it will at least provide an opportunity to work on your credit score. The most common types of loans that banks and credit unions offer customers with less than perfect credit are home equity lines of credit and title loans on vehicles. This gives them something tangible to fix the loan to in the event of non-payment. Aside from typical financial institutions, there are many other agencies that can be found online and locally, as well, that are willing to loan to those with bad credit. As with the credit cards, you should expect higher interest rates for lower credit scores but that may be a small price to pay to improve your credit rating.

How to apply for a free credit report