How to Get Approved for Personal Loans for Bad Credit

how to get approved for personal loans for bad credit - ratewise
ratewise logo - ratewise
by ratewise

For the responsible borrower, personal loans for bad credit is not a money pit. It is all about perspective, and having limited options works to your advantage.

If you’ve been tossing around the idea of applying for a loan, don’t get fooled by sales language. Use the information below to make an informed decision about your financial future.

Bad credit loans are not bad

Every loan has its own terms, and it is up to you to figure out if those terms are bad for your situation. A loan that isn’t good for you won’t have a giant neon size advertising that it is financial poison.

Pay attention to the fine print and take a realistic look at whether a personal loan for bad credit will help you. Do you trust the company, its brand, and the person talking to you? Those three things are mandatory and should not be taken lightly.

There is a limit to how high your credit score can go, but debt has no bottom. Choosing a bad credit loan without research will only make it more difficult to get out of a financial rut.

A contract is binding, so changing your mind after signing will only cause issues. Make it a point to have a goal in mind before coming to an agreement. This will prevent you from ‘seeing stars’ when nearing a contract signing for a bad credit loan.

It’s Not a miracle

When new money lands in your lap, it is easy to lose sight of its true purpose. Sometimes people have the urge to skim off of the top with their new money and use the rest for its intended purpose.

Dipping into money that is supposed to save your financial future is not wise. Before you enter into a binding contract for a bad credit loan, consider opening a new bank account.

This gets rid of bad intentions by forcing you to isolate your financial resolutions into one account. It’s a clever trick that can save you thousands of dollars a year in cash.

Before you get to the meat and potatoes of signing up for a loan, look at your current debt – is it manageable? With the amount of money you bring in, can you realistically get that debt down without a loan?

If the answer is yes, then getting a bad credit loan may not be the best route. Don’t depend on a loan to get the job done if you can handle it all by yourself.

How can you get a personal loan for bad credit?

After looking over everything and giving yourself a tough-love pep talk, look up your credit score. There are plenty of websites to get that done, but the official way is just fine.

Equifax, TransUnion, and Experian all offer free credit reports once each year. For transparency, while rebuilding your credit, you may want to sign up for a service that lets you view the score 24/7.

The next thing you want to do is look up loan companies that fall within your current credit score range. Although you can apply for loans that require an extra score, there is a chance it will show up on your credit if it gets declined.

Every point helps, so a few bad applications can unintentionally knock you out of consideration for a loan you actually want. Instead of hoping for one to go through that is out of your reach, stay within the boundaries of the current score.

That means staying in your lane financially, even if it is a hit to your pride. This is an important lesson in creditworthiness and will last a lifetime when followed.

Don’t stress out if you don’t understand some of the languages within the offers. Be upfront and ask for help when needed during the sign-up process. Once your application is accepted, go into detective mode.

Before committing to a contract, there is nothing in writing that you shouldn’t understand. Instead of waiting for something to be explained, become proactive with your questions.

Are the loan types different?

Loan types have their own benefits and should be researched thoroughly. You may find that personal loans for bad credit are a better option than higher tier loans. Instead of creating additional debt, a bad credit loan can help you deal with a financial crisis without breaking the bank.

Unsecured personal loans aren’t backed by collateral and put the pressure on the lender. Secured loans require collateral and protect the lender if you default on the contract.

With personal loans for bad credit, you’ll likely deal with secured loans. Rates vary by individual, but the most important part is that you’re on the hook by not following through.

Other than that one difference, secured and unsecured loans really aren’t that different. If you want a chance at a better rate, go for unsecured. But in order to get secured at a good rate, you need to have great credit.

It’s that small catch that leads to a lot of people being happier with what a secured contract provides.

Is it a scam?

Personal loans for bad credit are not a scam. Like all loans, bad credit loans need to be approached with caution. To avoid giving away information that hurts your credit score, deal with companies that have a reputation.

A good loan company will have testimonials on their website. This is the easiest way to verify whether a bad loan company is legit. When you’re putting a financial future in the hands of a company, all of its parts need to be on the same level.

Treat it like a business

When a payment schedule is set up, follow it. Personal loans for bad credit require the same responsibility as regular loans. Sometimes the company will offer incentives for paying on time and may reward you by lowering the rate.

Look for these incentives and set up a schedule that shows the amount of money saved during the contract. By making it a goal, it’s easier to follow the payment schedule.

Using automatic bank drafts will prevent missed payments, and for some loans, these are mandatory. No personal information is sold or distributed when signing up for bank auto drafts.

A loan company won’t take out more than its allotted fee, so there won’t be any surprises if you have an unfortunate financial slip.

Properly researched loan companies won’t put you in a position to worry about this type of behaviour. It is both illegal and unethical for a loan company to take out more than what it’s owed, even if you default on the loan.

Take care of your debts

This is not a get out of jail free card. Personal loans for bad credit are often the end of the line for a lot of people. It is the best way to take care of your debts without incurring extra financial hardship.

With that said, you should do everything possible to raise your score before applying for a bad credit loan. Even if it is by a few points, the new score will grant you access to many more financial options.

Pay off a small debt (make sure to get it in writing) and wait about a month for the score to reflect the change. Do what you can, but keep your choices open before diving headfirst into a bad credit loan.

Wrap up

Don’t get kicked while you’re down financially. Life can come at you hard, but there are tools available to balance everything out. Look at all of your financial choices and make the decision that makes the most sense.

Find a great deal on your next loan

Whatever term suits your budget, RateWise can match you with a local broker that knows how to help—regardless of your credit score! Get pre-approved for up to £10,000 today!

How to get approved for personal loans for bad credit FAQs

Can I get a loan with bad credit UK?

You can get a loan for bad credit in the UK by applying for one at RateWise. A certified lender will help you arrange the amount and term of your loan.

How can I get approved for a loan with bad credit?

To get approved for a loan with bad credit you can opt for a secured loan or shop around and see what banks and credit unions can offer for your situation.

Let us know what type of loan you are looking for by filling out our application form and we will search for certified lenders to get you approved.

Can you get a personal loan with a credit score of 550?

You can get a personal loan with a credit score of 550 but you may have a higher interest rate than if your credit score were lower. In the meantime, try boosting your score a bit.

Are there any guaranteed loans for bad credit?

There are not guaranteed loans for bad credit, but some loans are out there for those with bad credit.

How can I get a loan without a credit check?

To get a loan without a credit check you could apply for a payday loan or auto title loan. You will have to provide a proof of income and bank information instead of a credit check. This loan option is usually for short term loans only.

Categories: Personal Finance
Tags: Bad Credit How To