How to Get a Loan with Bad Credit

Life happens and mistakes can negatively impact your credit score for years.
Our guide can help people with bad credit get a loan.

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Bad Credit

Oftentimes those with poor credit are offered bad credit loans, with no other option than to borrow money at higher interest rates and serious penalty fees, but what else can be done?

Life happens, and it happens fast, hard, and unexpectedly—usually throwing more curveballs than you can handle all at once. The car breaks down, you get laid off, or an accident occurs that results in a tidal wave of medical bills.

When you’re put into a situation where quick cash is the only way to stay afloat, you’re almost immediately reminded of your credit score. Those three digits can play a big factor in the outcome of your loan request. They are the cherry on top of an overbearing situation, the straw that breaks the camel’s back.

Don’t despair. We're not a lender, but we’ve written this article to help you avoid the fatal pitfalls and vice-grip money lenders that may be out there. These tips will teach you how to request a loan with bad credit, so you can keep moving forward despite an unfortunate situation.

Get a Co-Signer

Need a loan with bad credit? You can get a co-signer. The fact of the matter is that loans for people with bad credit usually come with costly terms–a high interest rate being one of them. Your credit score will directly impact the interest rate of your loan, which will determine how much extra you’ll end up paying for the money you borrowed.

When you enlist the help of a co-signer, the interest rate will be calculated according to the co-signer’s credit score. So, if you know someone with a great score and they’re in a position to help you get a loan, it doesn’t hurt to ask.

Even so much as a 40-point difference in a score can save you hundreds of dollars, depending on the amount borrowed and the terms agreed upon. Here’s a quick example using typical APRs according to credit scores.

While these APRs are only examples, this chart gives a good idea of how the difference in credit scores and thus rates lead to a big difference in total money repaid:

Credit Score Amount APR Total Paid
300-639 $5,000 29% $6,450
640-679 $5,000 19% $5,950
680-719 $5,000 14% $5,700
720-850 $5,000 11% $5,550

Let’s say you have a poor credit score of 635 and you apply for a small bad credit loan of $5k. In our hypothetical example, this loan comes with an interest rate of 29%. That means that you have to pay back the loan in full, plus 29% of the total amount borrowed—which is a whopping $1,450 for a grand total of $6,450.

Now let’s reimagine the scenario with a cosigner who has an average credit score of 645 (just 10 points higher than yours). You are approved for the loan of $5k with an interest rate of 19%, which brings your grand total to $5,950.

By seeking the help of a cosigner with a credit score just barely higher than yours, you could potentially save $500 in interest—and the savings increase the higher the credit score goes.

Join a Credit Union

Joining a credit union is another great way to avoid the pain points of securing small loans for bad credit. At a traditional bank or lending office, loans for people with bad credit are usually based off of the applicant’s credit score. Credit unions do things a little differently.

When you are a member of a credit union and you apply for a loan, the review process takes into account several different factors, not just your score. Credit unions may consider your length of employment, your debt-to-income ratio, and other components of your overall financial health.

This is a great option for people who have recently pulled themselves out of a tough financial situation and are making great strides toward improvement.

Get a Personal Loan

If you had some bad luck trying to secure a loan from a financial institution, you may want to look for personal installment lenders as a more likely alternative. Installment loans for bad credit can come with high interest rates, but not always as high as a third-party lender.

Personal lenders are similar to a credit union in that they measure several factors of your overall financial health to approve or deny your loan. This is also a more convenient route, as you’ll likely find plenty of online loans for bad credit from personal installment lenders.

Find Fair Personal Loans for Bad Credit

Learning how to get a loan with bad credit is the first step; now it’s time to use the tips we provided to see if you qualify for a personal loan.

Learn more about the ins and outs of personal loans for bad credit, or submit a request for a personal loan right now, so you don’t have to put your life on hold.