So here’s the great news – you can actually get a loan with a poor credit score. Getting your way around personal lenders with a poor credit score is almost impossible. However, personal loans for poor credit scores are there to bridge that financial gap.
In this article, we cover everything about them. We’ll also point you to the right lenders who’ll guarantee your approval.
FICO defines a poor credit score as anything below 580.
These borrowers have heavily damaged credit profiles with constant late repayments. They’ve also continuously surpassed their credit card limits or worse, are bankrupt.
Such borrowers are likely to face rejection from multiple lenders. The few that will offer them loans demand exorbitant interest rates.
Borrowers who lack credit profiles may also fall into this category. That could be because they’ve never taken any loans before.
It takes time to build a good credit score. However, it’s possible and borrowers can eventually access better loan products and terms.
Yes, borrowers with poor credit scores can also access loans. Though many lenders are willing to offer them poor credit score personal loans, these borrowers have limited choices.
And, what’s more, they’ll likely pay higher loan charges and interest rates due to the perceived lender risks. Lenders aren’t really sure if you’ll repay your loan.
Even with the limited choices, take time to shop around for lenders with better terms and more affordable rates. Doing exhaustive research is one step towards better financial health.
Choosing the wrong loan product will only hurt your credit score some more, and place you in a financial mess and recurrent debt cycle.
Taking a prequalification will also help you determine your loan terms beforehand without hurting your credit score.
Different lenders have different requirements for vetting potential poor credit score borrowers.
The standard requirements cutting across all lenders is that the borrowers should be legal residents of the United States and should be 18 years and above.
The borrowers should also have poor credit scores (basically anything below 600).
Lenders might also need you to prove your income stability and income-to-debt ratio to gauge your level of risk.
A stable income and low income-to-debt ratio will give you an upper hand with most lenders.
Alternatively, you can opt for a co-signer with a stellar financial score and a lower debt-to-income ratio.
Other lenders also have arrangements for providing loan products to borrowers with collateral. A car, house, piece of land, or any valuable property can get you a loan without the lender concentrating on your poor credit score.
Resist the temptation to just follow any lender promising loans with no credit profile. Many predatory lenders are looking to take advantage of your situation.
Banks and credit unions are among the most trusted lenders with favorable terms.
Looking to take some poor credit score personal loans? Here are some of the lenders you can approach;
Banks are among the top poor credit score lenders.
Generally, banks give out loans based on the creditworthiness of borrowers. However, they have arrangements for borrowers with poor credit profiles.
To get your way with banks, get a co-signer with a good credit profile, and steady income.
Banks charge high-interest rates since these are considered high-risk loans. They may also charge such fees as origination and late repayment fees.
Credit unions are also among the most reliable poor credit score personal loan lenders. They easily give out loans to borrowers with poor credit profiles.
Their application process is also fairly easy, and will mostly disburse the money within 24 hours of application if successful.
They are most lenient to members charging fairly lower interest rates compared to other lenders.
They also have better loan terms, depending on the relationship with the borrower.
Online lenders boast lots of loan products that borrowers can take.
They have the lowest interests and barely any charges. This is owed to the fact that they don’t have physical operational offices like banks. That cuts their costs significantly. They then transfer the benefits to the borrowers.
Their application process is also fast and convenient. There are no physical forms filled. Everything is done online.
Avant, Upstart, and OneMain Financial are among the best online lenders. Check them out for personal loans for poor credit scores.
You can borrow from $1000 to $50,000.
The lender retains the right to set your loan limit based on your creditworthiness and your ability to repay.
Credit Unions could easily grant you higher limits based on your past relationship with them if you are a member.
You can also access higher loan limits if you take the time to build your credit profile. You do this by servicing your existing loans on time. You should also avoid reaching your monthly credit card limits.
Adding your property as security can also have lenders offering you higher loans, depending on the value of the property.
Resist the temptation to go for a loan higher than what you can actually afford to repay. Late and missed repayments will only hurt your credit score even more.
Further, you could lose your property if you used one as security, and the relationship with your co-signer could be ruined if you had one.
How much you pay as interest on any loan product often depends on the type of loan in question, the amount, perceived lender risk, and the repayment period.
Personal loans for poor credit scores generally attract higher interest rates. Lenders view it as risky lending borrowers with a poor credit score. They’re not really sure of repayment.
The above lenders charge between 7.99 to 35.00% APR.
How much you’ll pay for interest also depends on your relationship with the lender. Credit Unions are known to charge members lower rates.
You’ll also pay lower rates if you pledge your property as collateral to act as security for your loan.
The same case is also when you have a co-signer or guarantor with a good credit score.
Online lenders like Upgrade charge the lowest interest rates.
Before applying for a loan, shop around for lenders charging lower interests. The APR will give you an idea of how much is charged. So, you don’t just focus on the interest, but other loan charges, too.
Here are some poor credit score alternatives you could consider;
These are short-term loans known to help with emergency cash needs. They’re typically lower than $500.
They often attract higher interest rates. They charge up to 400% interest rates.
Payday loan lenders aren’t concerned with your credit score, and will not run a credit check on you.
You risk falling into a deeper financial mess with payday loans. Only go for them as the last option after exhausting all other avenues.
A cash advance is a short-term loan product issued by your credit card lender. Your cash disbursement is basically borrowed from your credit card’s balance.
Cash advances are a faster means of getting cash and can help with emergency bills, and when you are in a fix.
However, their interests start accumulating immediately. Therefore, its frequent use could place you in a debt cycle.
Take the following steps to repair your credit score;
Yes, you can get a loan with a credit score of 550. However, you’ll part with higher interest rates and might not get larger loans.
Shop around for suitable poor credit score personal loan lenders. Apply and wait for the approval.
Banks, credit scores, and online lenders offer personal loans for people with poor credit scores. The above lenders have some of the best terms.
You can borrow from $1000 to $50,000 with poor credit score personal loans.
Yes, no credit loans exist. Payday loans, for instance, won’t have lenders checking your credit scores.