How to get a loan if you have bad credit score

Bad credit? Worry not! You can still get a loan if you play your cards well.
digital payment and technologyLenders use your credit score, among other parameters, to determine your ability to pay them back. The credit score is derived from your credit report that highlights the amount you have borrowed, your payment schedule, and your credit history, among other factors. This information helps lenders to decide on whether offering you a loan is risky or not.

While most people believe you can’t get a loan with a bad credit score, this isn’t entirely true. There are bad credit payday loans for which you can apply. Although credit score is a factor that you can’t ignore, some lenders choose to consider other factors such as your income, credit history, collateral, and debts.

How does bad credit affect borrowing?

The credit score falls between 300 and 850. There is no specific figure for a bad credit score. If your score is below 650, you fall under this category. Meaning your loans options are limited and may only qualify for loans with a high-interest rate.

If your credit reports show late payments, lots of debts, and other negatives marks, you have bad credit. A low credit score informs the lender that there is a chance you may not pay back the loan in the future.

The decision on whether to consider a borrower’s credit score varies from lender to lender. Some only go with borrowers with a good credit score. Others consider bad credit borrowers, while some are generous enough to lend to every borrower.

However, individuals with a credit score above 700 attract loans with the best terms and lowest interest rates. Those with a score below 650 are burdened with high-interest rates and original high fees if approved for a loan. Consumers with a score between 650 and 700 are left to weigh between loan cost and loan benefits.

In simpler terms, the higher the credit score, the better the loan deal. So how can you get a loan with a bad credit score? Check below.

How to get a loan if you have bad credit score

  • Improve your credit score

Yes, it’s possible. The first thing you should think of is to improve your credit score, especially if it’s not an emergency. A good credit score is a guarantee that you will qualify for the loan.

First, clear all your bills promptly, and secondly, ensure that the balance on your credit cards is not more than 30 percent of the limit. Finally, avoid new credit at all costs. The Three factors could boost your credit score by 100 points within three to six months.

  • Request an in-person interview

If your loan application is an emergency and your lender has turned down your application, it’s time to request an in-person interview. You will use the opportunity to convince the credit union or bank that you are creditworthy.

Lenders value stability. Carry documents that prove that you have a stable life or job. For instance, show that you have worked for a specific company for several years and lived in the same house. Some of the documents you can bring on board include tax return forms, a list of assets, job history, bank statements, and a list of unsecured debts.

Note that some of these documents aren’t required when applying for a loan, but they boost your bargaining power. Also, be ready to answer questions regarding your credit history.

  • Borrow secured loans

It’s easier to qualify for a secured personal loan with a below-average credit score. Some lenders will agree to give you the money if you back up your loan application with an asset such as a car or home.

  • Get a co-signer

A co-signer would also come in hand; they will commit to repaying the loan if you fail. A co-signer with a high credit score will help you secure a loan at a lower interest rate. Talk to a relative, friend, coworker, or someone willing to help.

Your lender will update your loan payment information on your credit report and your co-signers credit report. If you delay payments or don’t pay them back, both of you will suffer. However, if you pay back on time, your credit score will rise, making it easier to qualify for loans in the future.

  • Consider prequalification

Some lenders allow you to check whether your loan application will go through or rather prequalify for a loan before conducting a thorough credit check.

However, for the actual loan application, your lender will do a hard credit check. Be prepared and ensure that you impress the lender with your planned payment strategy.

  • Do research

Do a background check on your lender before you apply for a loan. Consumers with bad credit scores attract direct mail campaigns that advertise loans offered at low-interest rates.

The low rates of 6 to 8 percent are, in a real sense, just an introductory rate and increase after some time. They offer the loan at a low-interest rate on the condition that you pay it back within the limited time frame. If you fail, the interest rate raises to a 20 percent to 30 percent range. You will pay back more than you would have paid while working with a reputable lender.


The reality of getting a loan with a low credit score is that your overall payments will be more than those with a high credit score. However, you can land a good deal if you shop around for a lenient and legit lender.

Ensure that you are aware of the cost you will incur to get the loan. Read and understand the loan agreement and how your interest will be structured and determined. If you aren’t careful, you might miss on add-on loans that will cost you a significant amount of money when paying back the loan.

Finally, knowing your credit score gives you a rough idea of the kind of deal you may get, including the interest rate and initial cost. If your credit union or bank denies you a loan, try peer-to-peer borrowing. There is always a way!