How to Get Unsecured Personal Loans With Bad Credit History

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Obtaining a personal loan with bad credit may require extensive research to find the right lender.
Obtaining a personal loan with bad credit may require extensive research to find the right lender. (Image: Jupiterimages/BananaStock/Getty Images)

There are times when you may need to obtain a personal loan to handle a health-related issue, car repairs or other types of emergencies. However, if you have bad credit your options for obtaining certain loans are limited. There are various options available, though, that can increase your chances for loan approval.

Write a 100-word statement explaining the negative debt on your credit. The underwriting department may approve your loan based on your statement. For example, you became ill and were unable to pay a certain bill. The credit bureaus can be contacted by sending a letter to each one, including the 100-word statement as well as your Social Security number, current address, and the name and account number of the negative item. The 100-word statement also may help if the lender is reviewing your credit report.

Obtain a cosigner when applying for the loan. A cosigner may have a stronger credit history than you, which the lender factors into approving your loan. Some people may be reluctant to cosign for you because if you default on the loan, the cosigner becomes responsible. A cosigner will need to sign their name on the application and provide their Social Security number and other financial details.

Apply for a loan using the institution where you currently have an account. For example, if you're a member of a credit union or bank, apply for a loan through them as they may review your positive banking history and be willing to take a risk on giving you a loan.

Decrease the amount of money you need. When you are trying to borrow large amounts of money the credit guidelines are more strict. The more money you request, the larger the risk the lender is taking. Once a smaller loan amount is paid off, attempt to apply for the larger amount.

Obtain a payday loan. Payday loans rely on your employment history and checking or savings account to approve your loan; they rarely perform credit checks. Locate payday lenders in your area by visiting check-cashing stores. Payday lenders tend to have higher interest rates so read the terms and conditions carefully.

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