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Step 1
Frame the need. If you have bad credit, lenders may not see your need for a loan so you can take a vacation as a good enough reason to do business with you. To request a loan, there must be a loan amount. Be as specific as possible and put the request in writing. Do not ask them to lend you "whatever they can;" ask a lender for a specific amount with an explanation for how you came to that figure. For example, "I would like to borrow $5,000 which is the minimum required as a down payment on the home I like. I can afford a payment of up to $900 per month to repay this loan in six months." If the loan is to start or enhance a business, present a business plan.
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Step 2
Collect evidence showing you are worth the risk. While more loan decisions are being made initially by computers within minutes of the application, there are humans behind those monitors that can override the decision of a computer. If you got a pay raise or a new job, won the lottery or inherited some assets, bring documentation of this with you as proof that from this point on, you will be able to repay a loan on time.
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Step 3
Expect what seems to be an unfair exchange. When the going interest rate for unsecured loans is 10 percent, if a loan is offered to you, the rate might seem unfairly higher--for example, 18 percent. If the loan is worth the higher interest rate, try at least to negotiate for a reduction if you make on-time payments for six months or more. If you have collateral such as a home, or other tangible valuables, the lender is likely to consider a lower interest or more favorable terms on a loan offer in exchange for a lien on that collateral.
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Step 4
Look for alternative loan resources. With bad credit, the traditional lenders are unlikely sources for a loan, so look for alternative sources. There are quite a few lenders that claim to specialize in lending to those with low or bad credit scores. Family and friends might also be the way to go. Of course, they know you well enough to know if you really are a bad risk, so approach them in the same manner as you would a lender. Consider www.Prosper.com as a way to offer family and friends a way to chip in to the overall loan you need, and collect the repayment with interest via online payments.
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Step 5
Get money with a discounted note, or your payroll stub. If you have accounts receivables that are outstanding, some lenders will use those as collateral to give you a percentage of that money upfront while they wait to collect the receivable later. If you have a verifiable job, some lenders will give you loans up to $1,000 in exchange for your post-dated check for the amount of the loan plus their fees.
