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According to the latest statistics, 14 million Americans owe more than $10,000 in credit card debt. A personal loan can help you consolidate your debt or make a major purchase such as a new vehicle.
If you’re looking to obtain a personal loan but you have bad credit, there’s no need to be discouraged.
Read on for a list of five tips for getting personal loans with bad credit, so you can find the option that’s right for you.
Some personal loan borrowers don’t even know what their current FICO or credit score is. Before you start shopping for personal loans, find out your score. It’s the best way to get a better idea of where you stand.
Most lenders have a minimum requirement when it comes to credit scores. If yours is too low to meet those minimum requirements, you might get rejected for the loan.
You can get free access to your credit score through your bank, several free online services, or through your credit card company. This is also a good time to get your hands on a free copy of your credit report. Read the report carefully and make sure you contest any errors that you spot right away so they can be corrected.
Some bad credit loan lenders don’t have minimum credit score requirements. If you find that your score is low, then these types of lenders can be a great alternative.
If you find that your credit score is low, you might have better approval odds with a co-signer. If you have someone you trust (like a family member or a close friend) with better credit and more income, they may be willing to co-sign the loan.
When you add a co-signer, the lender will look at both credit and financial profiles. A co-signer with a higher income and credit score can usually help to improve your approval odds.
Make sure you confirm that the lender allows co-signers before you apply. Not all personal loans offer the option to add one, so it’s important to confirm this before you fill out the application.
Keep in mind that the co-signer listed on the loan application will not have access to the loan funds or payment information. However, they are promising to repay the loan if you are unable to do so. If you don’t make payments, both of your credit scores could suffer.
Whether you’re buying a new home, applying for a credit card, or looking for a personal loan, you want to make sure you’re getting the best deal. When it comes to personal loans with bad credit, make sure you do some research.
Not all lenders are the same, and some may offer you much better terms and conditions. Take some time to compare several different lenders side-by-side based on your score.
If you do your homework ahead of time, you’ll have a much better chance of getting approved. You’ll also likely find the best possible option in terms of the interest rate and repayment terms.
It’s also important to look at customer reviews. These reviews will give you insight into others’ experiences and opinions on the lender before you sign on the dotted line.
Look carefully at the fine print of bad credit loans. Some may charge you an origination fee or prepayment fees that could cost you more in the long run.
Before you obtain a personal loan, it’s vital that you know what your monthly payment will be. Make sure that this new payment fits within your current budget.
If you can’t squeeze these new payments into your budget, you could end up making your credit score worse. Always look at why you need a personal loan and what you plan to use it for before you apply.
If you’re getting a personal loan to consolidate debt, it could be a smart move. Use the money you get to pay off higher-interest debt to help you save over time.
One way to figure out what your payments might be is to use a personal loan calculator. These calculators are easy to use, and they’ll give you an advanced snapshot of your potential payments before you commit.
Getting prequalified for a loan lets you determine what the loan amount, rates, and terms are that you might qualify for. The process allows you to do this without hurting your credit since you’re not submitting a full application.
In most cases, prequalification comes with a “soft pull” that won’t hurt your scores. Most lenders only do a “hard pull” when you actually apply for a loan. A hard credit pull can temporarily lower your score, so consider getting prequalified first.
Check with several lenders to find out which ones will allow you to prequalify. Next, look at several different options together to determine which lender you want to apply with. This is also a good time to compare fees and extra charges before you actually apply.
The option to prequalify allows you to shop around without your credit score taking a hit. Most lenders will let you finish the application process online, and it usually only takes a few minutes to complete.
Remember these tips to help you determine which personal loans with bad credit will work for you. From checking your score to getting a co-signer, the best loans will give you the cash you need at a great rate.
For more information about our personal loans, contact the help desk at First Financial today.
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