Places To Get Small Loans Even With Bad Credit
Having a low FICO score doesn’t mean you can’t qualify for a personal loan to pay for your urgent expenses. Small loans for bad credit are available for customers with a range of scores. However, you need to know where to look to find one that suits your needs.
In this article, we’ll look at the relationship between bad credit, lending product applications, and APRs. In addition, we’ll give you a rundown of the various types of lenders that offer financing products that are likely to suit your needs.
How Bad Credit Will Affect Your Loan Application
It’s essential that you explore the link between your credit score and the types of financing you’ll be eligible for. Knowing this information will shed light on the interest rates and other fees you can expect to pay.
- As measured by your FICO score (which ranges between 300 and 850), your creditworthiness is the primary criterion that lenders use when assessing your application. The higher your score, the better your chances of being approved. Your APR is likely to be better as well
- Having a bad rating, which generally means a score of 580 or less, can have a negative impact on your loan application. You may not qualify for financing from traditional lenders like banks or card companies. Fortunately, there are a variety of options in the lending market that may still suit your requirements
Let’s look at some of the most common lending types for the customers whose ratings are less than stellar.
Where To Apply For A Small Loan With A Low FICO Score
Knowing where to apply for a lending product can dramatically increase your chances of success. You won’t be wasting time with lenders that are likely to reject your application. Here are some financing options you can consider.
These financial institutions have a long track record in the industry, but they don’t always offer the best financing deals to bad credit borrowers.
- If you’re a long-term bank customer, you may be able to leverage your relationship to secure a loan or card even if your score isn’t in the highest category
- Since banks have relatively strict lending criteria, you shouldn’t be disheartened if your application is rejected. You may want to opt for one of the other options on our list if your FICO numbers are significantly lower than 600
If you’d like the reliability of a bank but would prefer a more personalized level of service, you may want to explore the option of joining your local credit union.
- These financial institutions tend to be smaller and more community based than banks. They also operate on a membership basis, which gives them an incentive to recruit new members and keep them satisfied. This could mean that you can secure a lending product or card from a union even if your bank rejected your application
- It’s worth noting that unions are sometimes not as technologically on-trend as banks or online financing providers. You’ll want to check what digital banking options a credit union provides before you join
Bad Credit Personal Loan Providers
This type of financing is widely available from online lenders. Here are a couple of its benefits:
- Quick application times: Most online lenders offer short applications, some with immediate approval. The documentary requirements are generally simple and easy to complete. Additionally, you’ll be able to submit your paperwork online if necessary
- Your score won’t count against you: A significant advantage of these loans is that they’re designed specifically for customers who don’t necessarily have a perfect financial history. These lenders will look beyond your rating and assess your application based on factors like your income and expenses as well as existing debts
Alternatives For Bad Credit Borrowers
You may find that your loan application is rejected for various reasons. However, this doesn’t mean that you won’t be able to pay for your urgent expenses. Here are some alternative funding sources you can explore.
- Drawing on your savings: If you have three to six months’ worth of expenses or more in your emergency fund, you could think of withdrawing the funds you need. Make sure to set up a repayment plan, so you replenish your savings sooner than later
- Home equity financing and title loans: This type of lending will allow you to borrow against the value of your home or car. You’ll need to make your payments on time each month to avoid defaulting on the loan. Failure to make repayments could result in your assets being repossessed or foreclosed on
The Bottom Line
Having a low to average score doesn’t mean you should write off the prospect of obtaining financing.
By knowing about the various types of lenders and the products they offer, you’ll be in an excellent position to apply for a financial product that suits your needs and creditworthiness. Bad credit personal loans are an especially good option if you need to finance emergency expenses.