Before turning thirty, seven out of every ten Americans will mess up their credit score.
If you’ve slipped up on your credit, all hope isn’t lost! Remember, you’re not alone and there are ways you can get back on track.
With some smart financial moves, you can even get a loan with poor credit. Here’s how it’s done.
1. Learn All About Your Credit Score
The first step of getting a loan is figuring out your credit score. Your lenders will definitely know all about your credit score, so make sure you do too.
Your three-digit FICO score is the make-or-break in getting your loan approved. To find out the figure, head into your bank to ask if they provide free credit scores.
If they don’t, you can request your score from FICO, but this option is not free. You can read more here.
Wondering why is it important to know your credit score? You need to know how to fix it!
2. Fix Your Credit Rating
Rather than diving straight into getting the first loan you’re offered, can you spend some time fixing your credit rating?
This isn’t always possible, especially if you’re in desperate need of cash and quickly. But, if you do have a few months where you can live frugally and build your credit, this is your best option.
- Never be late to pay your bills
- Keep old, paid off cards open.
- Use far less than your credit limit.
- Start paying off as much of your credit card debt as you can possibly afford.
An average American has a balance of $6,375 on their credit card. Chipping away at your debt can help you be more financially secure in the future and help you get a better loan.
3. Consider a Secured Loan
If you’re now working on paying off your debt and fixing your credit rating, it’s time to look at what time of loan is right for you.
One of the best options to consider is a secured loan if you have bad credit. However, make sure that whatever asset you use as collateral, you can afford to lose if something goes wrong.
Borrowers can offer their car or house as collateral. But, this could be damaging if you’re not completely sure you can pay back the loan.
Never choose a loan which is both high-interest and short-term as you will be damaging your financial health further by taking on such a large risk.
4. Look into Personal Installment Lenders
If you simply don’t have time to build your credit and get a better loan, then consider a personal installment lender.
This is arguably a better option than a payday loan as these lenders will check many more aspects of your life, not just your credit rating.
However, do your research before you choose a personal installment lender. Speak to previous clients, or find reviews online to make sure you’re getting a good deal.
5. Rely on a Co-Signer
Still struggling to find a loan with your bad credit rating? Why not find a friend or family member who can co-sign with you.
However, remember that this person will be just as responsible as you are for your debt.
Don’t take this lightly and make sure you’re not dragging someone else’s credit down with your own. This could ruin a friendship and two people’s financial situation…
Get a Loan with Poor Credit? Do Your Research
You now have five tips on how to get a loan with poor credit. But, you should continue to read up on the subject and find a range of sources to help you decide where to turn.
If you’re still living with your parents, check out this article on whether it’s worth getting a loan while still living at home.