Personal Loans Bad Credit Loans
Even if you have bad credit, a personal loan may still be an option for you.
While many banks and credit unions will not approve a borrower with a credit score below 660, a number of online lenders offer personal loans to consumers with credit scores as low as 600 - or even lower. In fact, there are some online lenders that specialize in bad credit loans to help consumers consolidate debt.
By consolidating credit card debt with a personal loan, you will likely see an increase in your credit score. This occurs because your previously revolving credit card debt is now categorized as an installment debt, a type of debt many credit scoring models do not penalize you for having.
In order to qualify you'll need to have a reasonable debt-to-income ratio to reassure the lender you have the ability to repay the loan. If you are worried about qualifying, you may want to consider having a spouse or family member co-sign on the loan. More online lenders are making co-signing an option as part of their application process which often results in lower rates, larger loan amounts, and interest savings.
Yes, but you still need to be on the lookout for possible scams when shopping for bad credit loans. The most obvious sign is when a lender promises to send a loan after, first, receiving a fee. This is not the same thing as an origination fee which is money owed to a lender upon processing a loan agreement.
Some bad credit loans can be risky. This is especially true if the lender doesn’t do their homework such as checking your credit. In order to minimize the risk, make sure you discuss your ability to repay with the lender. They should also perform the necessary checks including your credit score and all possible repayment plans.