When you think about getting a personal loan, something you need to know is your credit score. When is the last time you checked yours? But if you find your score is bad, can you still qualify for a personal loan? We cover that here in this article.
Yes, You Can Still Qualify
Yes, you can absolutely still qualify for a personal loan, but it will be more difficult. Having bad credit doesn’t automatically rule you out of getting a loan, but your options will be more limited compared to someone with fair or good credit. You may be restricted on how much you can borrow or you might have a higher interest rate. In some cases, your personal loan could also require a cosigner.
So before applying for a personal loan with bad credit, you should always weigh the pros and cons of getting one. What’s your reason for taking out a personal loan? One good reason is to cover high-interest credit card debt with a personal loan with lower interest. This will result in you paying less in the long run. Another positive reason is to cover unexpected expenses, as other solutions, like payday loans, can put you in serious debt.
Where Should You Apply?
There are quite a few different places to apply for personal loans, but bad credit can also limit the number of places that will lend to you. Banks tend to have more strict standards for lending, but credit unions can be less so. However, some financial institutions will offer special plans and programs for people with bad credit, so always check banks and credit unions for these types of options.
An online lender can also be a good idea, but keep an eye on those interest rates. Online lenders often have much higher interest rates for those with bad credit and it can hurt you to accept those offers in the long run.
Compare Your Options
Just because you have bad credit doesn’t mean you should accept the first personal loan offer that comes your way. As with any loan, you need to carefully weigh your options. Which has a better repayment plan? Which is the best interest rate?
Shop around to different credit unions, banks, and other financial institutions. You may actually be surprised at the offers you have, especially if you have a higher income.
Bad credit doesn’t automatically rule you out of qualifying for a personal loan, but it will make things a bit more difficult for you. Before diving into a loan, you need to carefully go over your finances to make sure this loan is the best option for your financial future. You don’t want to put yourself in further debt for no reason (or bad reasons). Once you have a good idea of how much you need, it’s time to explore your options and see what credit unions, banks, and financial institutions are willing to offer you.
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