Can You Get Big Loans with a Bad Credit Score? Yes, It’s Possible. Here’s How
Bad credit is a serious problem for a lot of Americans. In fact, approximately 25 percent of all Americans (that’s 43.4 million people) have a credit score that is 599 or lower.
If you’re part of this group, you know that getting approved for credit cards and loans (especially big loans) can be quite challenging.
It’s important to know, though, that it’s not impossible for you to get the money you need, even with a low credit score.
Read on for some tips that will help you get big loans if your credit score is subpar.
Learn Your Credit Score
The first step to take if you want to apply for a loan is to check your credit score. A lot of people have no idea what their credit score is or if it’s accurate.
Start by checking your credit report and finding out your score. Then, look more closely at your report to see if there are any errors that are bringing your score down. If you notice any errors, work on getting them corrected as soon as possible.
Evaluating your report will also give you insight into the issues that have caused you to have a lower score. Is it a lot of late payments or missed payments, for example?
Work with a Credit Union
Once you know where you stand with your credit score, you can do some more research and find out which lenders are most likely to work with you.
As a general rule, credit unions are often more forgiving than banks and are more willing to work with people whose credit is less-than-stellar.
Reach out to a local credit union and find out what kind of loans you qualify for. You might be surprised at what’s available.
Apply for a Secured Loan
If your credit score is low, you might still be able to qualify for a secured loan.
Secured loans require you to offer up an asset like your car or your house as collateral in exchange for funding. Lenders are more likely to approve your application if they know that the loan is secured against something for value.
Make sure you have a plan to pay back this loan, though. Otherwise, you’ll end up losing your belongings if you can’t meet your payments on time.
Find a Co-Signer
Having someone with a high credit score co-sign your loan is a good way to access financing when your own credit isn’t up to par.
A co-signer is someone who agrees to take over your loan if you default. It’s a big responsibility, so it can be hard to find someone who’s willing to do it.
If you can, though, it’ll help you build your credit while also giving you access to the money you need.
Consider Personal Installment Lenders
A personal installment lender takes a lot of factors into account (not just your credit score) when determining whether or not they’ll provide you with the money you need.
Look into working with one if you’ve been turned down by other lenders and need money to cover a large emergency expense.
Work with an Online Lender
Online lenders are another good option to consider if you find yourself getting turned down by traditional lenders.
According to Bonsai Finance, online banks often offer better loan terms and interest rates than traditional lenders. They’re often more flexible as well and have options for people in all financial situations, including those with bad credit.
Before you agree to work with an online lender or give them your personal information, be sure to do some research to make sure they’re credible and don’t have any complaints against them.
Get Multiple Quotes
No matter what kind of lender you’re considering using, it’s smart to get multiple quotes before you agree to work with one over another.
Doing some research upfront will help you ensure you’re getting the best rates, loan terms, and fees possible.
Beware of Predatory Lenders
When your credit score is low and it’s harder for you to get lenders to approve your loan applications, you’re a prime target for predatory lenders.
Be wary of loan offers with terms that seem too good to be true. There’s a good chance they are.
Many predatory lenders offer loans that seem great on paper but are actually full of fine print that can cost you a lot of money in interest and fees later on.
Always read through loan agreements carefully before you agree to work with a particular lender.
Improve Your Credit Score
All of these strategies are useful when it comes to trying to get a loan with a bad credit score. While you’re working on choosing the best loan situation for your needs, though, it’s important to also work on improving your credit score.
Set up automatic payments to avoid late penalties, and make sure you’re keeping your credit utilization as low as possible.
You might even want to delay applying for a loan for a just a few months until you can raise your score. Even raising it by a small amount can help to increase your chances of approval and allow you to enjoy better terms and interest rates.
Get Big Loans Today
As you can see, it’s totally possible to get big loans when you have a low credit score. The key is to make sure you’re implementing the tips listed in this post.
It might take a bit of trial and error for you to get your loan application approved, especially if you want a loan with great terms and interest rates.
If you know all your options and take the right steps when applying for these loans, though, you’ll be much more likely to get approved and get your hands on the money you need.
Do you want to learn more about how to qualify for loans and manage your money?
If so, we’ve got plenty of helpful resources available to you. Check them out today by visiting the Money Management section of our website.