How to Get a Loan with Bad Credit?

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Contrary to popular belief, you are able to get a short-term loan even if your credit score isn’t completely up-to-scratch.

Whilst traditional banking institutions will only really lend to borrowers who have a strong credit rating, you’ll often be able to find independent lenders, both online and in-store, who will consider lending to people with different types of credit histories.

There are always financial difficulties in people’s lives, so the first steps in looking to solve any difficulties are keeping calm and assessing your options. The guidance below will provide you with some advice on how you can secure a short-term loan without perfect credit.

Key Points

  • Not everyone has a perfect credit score, and that shouldn’t stop you from accessing a financial product that you need!
  • There are lots of short-term options available for borrowers who don’t have an amazing credit history, such as payday loans, bad credit loans or title loans.
  • As long as you pass the other eligibility requirements and are applying from a legal state (see below), there are likely to be options for you.
  • There are also some simple ways for you to improve your credit score, such as paying off debts and credit card bills on-time.

What is the Process to Apply?

Check your eligibility.

There are only a few simple requirements to be eligible.

Firstly, you must be a U.S. resident, and you have to be at least 18 years of age. You would also need to have a consistent income with earnings at a minimum of $800 per month. Lastly, you are required to have a checking account that your payday loan can be deposited into.

Remember – not every US state offers short-term loans! Short-term financial products, such as payday loans, are illegal in: Arizona, Arkansas, Connecticut, Georgia, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont, West Virginia, and the District of Columbia.

If you are eligible…

Once you’ve passed the eligibility requirements, you must work out what you can afford to comfortably repay each month. You then should figure out how you will repay within the deadline set by your lender (usually 2-4 weeks).

Once you’ve done this, you can then compare loans with different companies to find one that best fits your financial ability and needs.

Try to only apply for loans that you’re likely to get, since each application will record a hard search on your report that can lower your score. It can be helpful to check your eligibility before you apply, to understand your chances of approval.

What do we mean by ‘Bad Credit’?

Having ‘bad credit’ means your credit history is viewed negatively by companies, so you’ll probably find it difficult to borrow money or access certain services. This information is gathered and collected by credit reference agencies, who hold your credit history and update it in real-time. But remember that each company has different criteria when assessing your credit history – some may see you more positively than others.

A bad credit score is typically a score of 580 or lower (on a scale of 300 to 850). Bad credit indicates that borrowers have a history of unpaid bills, late payments or debt.

Typically, a bad credit score can make it more difficult to obtain a credit card or a loan. However, some lenders have specific bad credit loans to make it easier for this borrower profile to obtain a loan.

How can I improve my credit score?

Improving your credit score will not happen overnight, but making some small important changes can really help your chances of being approved for financial products including loans, credit cards, mortgages and even a cell phone contract.

You can start by checking what your credit score is for just £2 and you can see which areas you are falling behind on and where you can improve. Make sure that you are regularly checking your score and there are a number of companies that can offer this and also give you free trials if you need to check from time-to-time.

In order to improve your credit score, you should consider paying off debts and credit card bills on time, but as well as this, you can improve your credit score by registering to vote, closing down unused credit cards and making sure to avoid applying to too many loans at once.