How to Get a Loan With Terrible Credit

You can get a loan even with terrible credit.

Getting a loan with terrible credit does present challenges, but you can overcome them with some creativity. Options include companies specialize in making high-risk loans to people with bad credit, or qualifying for a loan by offering collateral. Taking some time to examine all your options could help you land the loan you need despite your credit situation.

Instructions

1. Get copies of your credit reports. Examine your credit reports even though you know much of the information is negative. There may be some inaccurate information posted that can be removed, making your credit look just a little less terrible. Get free copies of your credit reports at the website Annual Credit Report. Click on "Request A Report" on the homepage and then follow the prompts. Federal law entitles you to one free copy of your credit report every 12 months from each of the three credit reporting bureaus--TransUnion, Experian and Equifax. Contact the credit bureaus directly to dispute any inaccuracies on your reports. You can find their contact information on the credit reports.

2. Borrow from a 401K or other retirement or savings account if possible. In most instances, no credit check will be required.

3. Borrow from family and friends. This practice has become more sophisticated, according to The Wall Street Journal. Some companies are now engaging in an emerging industry called social lending. The companies act as go-betweens to make family loans work more like business transactions, with signed documents and payment schedules. The company even collects the payments from you as a regular lender would. Because you're borrowing from family and friends, presumably no credit check would be required. You can learn more about this by tapping into your social networks online, attending investment club meetings in your area or consulting with a nonprofit credit counseling agency, such as Consumer Credit Counseling Service, which is listed in the telephone directory.

4. Put up collateral for a loan. Some credit unions or finance companies may offer you a loan if you have collateral such as a paid-off car or boat. Make a list of any assets you have that possibly could serve as collateral. Then make an appointment to see a loan officer at your bank or credit union. Explain your credit situation and your loan needs. If the loan officer can't help you, ask him to refer you to other lenders that might have more flexible lending standards. Contact those companies.

5. Take out a payday loan. The Federal Trade Commission says these high-interest loans should be a last resort. On its website, the FTC noted one payday loan with an interest rate of a whopping 391 percent. Despite that, some people with terrible credit do turn to payday loans for short-term loans.

References

• Federal Trade Commission: Payday Loans
• Wall Street Journal: How To Borrow From Family and Friends
• Consumer Credit Counseling Services: Financial Education