Most banks will only approve a loan if you have a credit score of 660 or higher. Anyone below that is considered a "credit risk" will need someone to co-sign the loan or present additional documents like proof of income and a list of assets.
However, there are personal loans for people who have bad credit. This guide can help you know the types of loans, their pros and cons, and how to apply for them.
Even if you have a low credit score or cannot meet the bank's other requirements, such as employment history or bank statements, you can still apply for a personal loan.
Like any other financial decision, taking out a loan requires some thought and preparation.
You can get a free credit score copy through agencies like Experian, Annual Credit Report, and TransUnion. While there are two credit scoring models (FICO and Vantage Score), most lending institutions will ask for the FICO score.
If you have a low score, you can ask for a credit report and double-check if there were any errors, such as payments that were not reflected. For example, many property managers do not report it when you pay rent — and making payments on time is a significant factor in your credit score.
Don't just borrow money because you can. What is the specific purpose of the loan? Is it an urgent need that can't be postponed or paid for with alternative sources of income? How will you budget the amount you receive? For example, if you took out an personal loan to pay for medical expenses, calculate how much you will spend on medicines versus doctor's fees.
Planning your loan and then carefully following a budget can help you make better decisions and give you a sense of control. This is very important when you're facing a financial problem. It can also help you form good habits that you can use when making your monthly budget and other financial decisions in the future.
Beware of scammers and fraudsters masquerading as online lenders but just trying to secure your information or get you to pay an upfront "processing fee." Then, when you try to get your loan amount, they suddenly disappear.
The signs of a credible, trustworthy lending institution are:
Lenders with no process who hide information and give marketing catchphrases like "no credit checks!" or "best loan amounts, guaranteed!" should not be trusted. They are simply trying to distract you or get you to sign an agreement immediately.
Remember, legitimate and responsible lenders will not withhold information nor rush you into taking out a loan. They understand that this is an important financial decision and will guide and assist you through the process — not push you into getting into something you don't understand.
Choosing a legitimate lender is the most critical decision you can make while looking for a loan for bad credit. Getting scammed is the last thing you need if you are in a tight financial spot.
Simple Fast Loans has a simple application process, and once your loan is approved, you receive the money on the same day or the next.
Start your loan application now. Fill out the form and take the first step towards raising emergency cash even with bad credit.