What to do if you have bad credit and need a loan

Having bad credit doesn’t necessarily mean that you can’t get loans anymore. If your credit score has already hit 680, this is the best time to stop it from decreasing. If you don’t have an idea as to where this score puts you as a debtor, here is an overview of how credit scores are seen by banks or lenders.

Score	Standing
760 – 850	Excellent
700 – 759	Very Good
660 – 699	Fair
620 – 659	Poor
Below 620	Extremely poor

If you already have a score below 660, don’t lose hope. There are still creditors who will be willing to grant you loans. However, you should expect that you’ll have to pay higher interest rates than the ones who have good credits.

It shouldn’t really be that hard to find a creditor if you are already in the bad credit zone. In fact, there are creditors who target masses with lower credit ratings. The real challenge of having bad credit is to improve and increase your score.

If you don’t know where to begin to fix your credit score dilemma, keep on reading. Here, we will list a few ways on how you can get a loan despite your bad credit and how you can build your credit score again.

Consider going to credit unions for a loan

Rather than having banks as your options to get any loans, look for credit unions near your area. If you don’t know yet, credit unions are non-profits. This means that credit unions are owned by members or customers.

Credit unions are more likely to offer you lower interest rates than big banks. Since they are non-profit, they’ll also most likely base your loan approval on your character. This is why it’s best to look for a credit union in your area. This could help you get a better shot of getting your loan application approved.

Get a co-signer or be an Authorized User

While getting a co-signer always seems to be an easy fix, this could actually either make or break your credit score. Obviously, you shouldn’t co-sign with people who are also dealing with bad credit loans. It’s best to know the person you will co-sign with very well. An established debtor is who you should be looking for.

If you find co-signing too risky, you can still look for a well-established debtor with a credit card. What you can do is to piggyback or be an authorized user on his or her account. The difference it makes with co-signing is that if the primary account holder, for some reason, delays a few payments, you won’t get negatively impacted. You only get credited for this positively.

Keep your balances low

This is very applicable to people with credit cards. Always try to keep your balances low. Set up payment reminders and if you don’t want to feel the heavy impact of having to pay your credit, send partial payments weekly.

Check with your bank or credit union if they allow bi-weekly payments. Make sure that you understand how a specific creditor calculates the interest that you pay. Some people opt to just keep on paying the interest until they are able to pay for the actual balance, but this shouldn’t be the case.

Bringing your balances down can also help lower the interest you’re paying. Especially if the interest of your loan is on a per diem basis.

Consider P2P platforms

If you want to take a break from owing big institutions some money, you can check different peer-to-peer (P2P) lending platforms. These are platforms than match you with individuals who could be willing to lend you money.

Typically, P2P platforms would only allow applications from debtors with a score of at least 600. Any score lower than that may not allow you to use this platform. It’s also common for P2P platforms to only allow a specific amount for their debtors to take out.

Get an online loan

Aside from P2P, getting online loans is becoming more widespread nowadays. This could be an industry made for people with low credit scores. People are actually biting into this because of its convenient application.

Online loan companies don’t make use of your FICO score to decide on approving your loan application. In fact, these companies usually have their own credit scoring. If your application gets approved, you get to have a clean slate. The better your credit gets, the higher the amount of loan you can get.

A Few More Reminders

If you want to make sure that your credit score will increase, make sure that you will actually get credited before signing up on a certain loan. While financial institutions are required to submit reports monthly, platforms like online loans are not required to do the same thing.

It’s always best to look around and check for options before you sign anything. Just make sure that the places you go to won’t immediately run a credit check as sometimes, this could also affect your credit score negatively.