How to Get a Personal Loan with Bad Credit

Having less than perfect credit can make it more difficult to obtain a loan, but not impossible.

Here are some ways you can get a personal loan with bad credit.

Difficulty: Moderately Easy

Instructions

1. Check with your bank first. If you have an established long term relationship with them that can work to your advantage as opposed to trying to obtain a loan through someone you have no history with.
   
   Don't assume that because you have a bad credit score or credit history that this will be the only determining factor in the loan qualification process. Sometimes other variables can be used, such as length of credit history, assets etc.

2. If you cannot use your regular bank try searching online. You can do a basic search such as "bad credit personal loans", "low credit score loans" etc. This will bring up several results.
   
   Research any companies that interest you. Be sure and read all of the terms and conditions and understand all of the fees associated with the loan offers. Make sure the companies are reputable by checking for complaints against them. You can do this by checking with the Better Business Bureau or do an online search using the company's name along with the word "complaints".

3. Consider using alternative services such as person to person loans which are also known as peer to peer lending. You can find these online or you may see ads in your local paper. One online example where you can find these types of loans is Prosper.com. Many of these types of lending groups have regulations such as minimum credit score requirements , but you may find they are more flexible than corporate style lending institutions.

4. Look to people you know. Family, friends and even employers may be willing to provide personal loans. It is advised to set up this type of loan in a professional manner and have all of the agreed upon terms in writing.

5. Once you have found loan options to pursue, gather all of your information together that you will need to supply to the lenders. This can include proof of income, asset documentation, financial reports etc. You may want to have a recent copy of your credit report on hand to use for discussing the possibilities of obtaining a loan from a lender. This way, if in the preliminary discussion it turns out you are unlikely to qualify for the loan, the lender will not have to pull a new credit report. Having your credit report pulled repeatedly can negatively impact your credit score.

6. Go over all of your options carefully before making any decisions. Be aware that most personal loans given to people with bad credit have higher interest rates and restrictions. Carefully consider your financial situation before taking on any new debts.

[jbechtold]

on 7/8/2009 What great tips.

[kristara]

on 5/9/2009 Great tips! Very difficult to get a loan right now especially when you ahve bad credit. 5*