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How To Get A Personal Loan With Poor Credit

How To Get A Personal Loan With Poor Credit

Getting a traditional loan with poor credit can be difficult enough but getting a personal loan can be almost impossible because of the nature of this type of loan. Personal loans by definition have no collateral and therefore a lender would be unable recoup any losses should the borrower default. A mortgage has a residential, commercial or open lot property which can have a lien placed upon it. An auto loan has a vehicle which can be repossessed if payments are no longer made. Personal loans have no such collateral protections but there are still options available for borrowers.

Get A Co-Signer

The most common option for borrowers with poor credit when seeking a personal loan is to have a cosigner sign the loan with them. If a family member or friend is willing to sign the dotted line on a contract then it may be possible to obtain a loan. This is because a cosigner is as legally responsible for the loan as you are. What this means is if you stop making payments and default on the loan then the lender can seek a civil judgment against either party. Obviously the cosigner has a high level of trust and is willing to risk their credit history on you. Do not take this trust lightly as a default is likely to burn a bridge you can ill afford to lose.

Use A Credit Union

Every financial institution has different lending requirements and some may be more flexible than others when granting personal loans. Even if you have poor credit you still may be able to get a personal loan if you have an established long-term relationship with your credit union. Credit unions are member owned and nonprofit and therefore go out of their way to accommodate their members financial needs. Do research ahead of time of various credit unions in your area by asking about personal loan requirements. It may be necessary to open an account at a credit union in advance of needing a personal loan. There is no guarantee that this increases your odds of successfully getting a personal loan when you have bad credit.

Request A Rapid Rescore

Almost 50% of all credit reports have some sort of error which can negatively impact a consumers credit score. Since a credit score is one of the determining factors in judging a persons credit worthiness, any black marks can hinder your ability to get a personal loan. Get a copy of your credit report from www.annualcreditreport.com and follow the procedures outlined to correct inaccurate information. It may also be possible to contact any companies where you made late payments and ask them to remove the corresponding negative remarks from your credit report. If the late payments are fairly old and you have been a good customer for the last few years then they may do this as a gesture of goodwill. Once that's done, request a rapid rescore which, will within a few days, hopefully raise your credit score. With a higher credit score it may be possible to get a personal loan as your poor credit may have increased to an acceptable level.

Image by: Steven Depolo