If your credit score is low, you may be uncertain about whether or not you are eligible for a personal loan from a traditional lender. Having bad credit can prevent loan approval from traditional lenders, but an online personal loan from an alternative lender could be your best option.
There are a variety of reasons why you might be considering a personal loan:
- Unexpected bills
- Special events
- Replacing a major appliance
- Unexpected car repairs
- Family emergencies
- Medical bills
A traditional lender such as a bank will probably not approve your application for a loan if you have a low credit score. An alternative, such as a payday lender, might approve you, but their loans may carry unrealistic terms that require you to repay by your next payday.
Consider another option like personal loans online for consumers with bad credit. An online personal loan could be your best option if you have poor credit.
Tips for Searching for A Personal Loan Online
If you have bad credit, there are a few key things to keep in mind while you shop for a personal loan.
- First a copy of your credit report and review it for accuracy. The 3 nationwide credit bureaus are required by law to provide you with your credit report for free each year. You can also pay to access your credit score. This score is generally used to determine risk and contributes to the interest rate you may be charged. Believe it or not, there can be errors in your credit report, and rectifying them can quickly boost your credit score.
- It’s generally best to apply directly with a lender. Websites that take your information to help you find a lender are really just marketing companies.
- Finally, work on improving your credit score!
Improving Your Credit Score
Working on improving your credit score can take time and effort, but it will be worth it in the end. Here are some basic steps you can do today:
- As your budget allows, pay off any outstanding bills or debt you may have. Look at your finances, and then look at what you owe. Calculate what you can afford to pay on each outstanding bill per month.
- Make sure you pay all your bills on time. Consider setting up automatic withdrawals for certain bills, eliminating any chance that you might make a late payment.
- Try not to use more than 35% of your available credit. If you have a $1,000 line of credit, you never use more than $350 of it. This is one of the most effective ways to use your debt and build your credit.
- If you’re unable to obtain a traditional credit card, inquire about ‘secured’ credit cards. You will be required to put a security deposit down for the amount of “secured credit” you want. Pay the card regularly and on time and your credit score will reflect it; secured credit cards are reported to the national credit bureaus once a month, just like a regular credit card.
Finally, obtaining a personal loan and using it responsibly could help stabilize your finances in the long run. In this way, you prevent additional negative impact on your credit. Just be sure you can pay off your personal loan when payments are due or sooner.
Don’t let bad credit get in your way! Research your options and work on improving your credit score for the future. You won’t regret it.