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Easy Ways to Secure a Loan with Less than Perfect Credit

By | source:Here Aug 8th, 2022

Life happens, and even with the most careful budgeting and saving, you may find yourself short of money for an emergency expense. Or maybe you need a little help to catch up on bills or pay for a pricey item.

A personal loan can be convenient for whatever you need extra cash, but what do you do if your credit score isn’t great? Sometimes you may manage your money well, but your credit score is low through no fault of your own. So, you’ll probably struggle to secure a loan from a traditional lender.

For your credit score to be considered good, it should be 650 or above. Your credit score is determined by the following factors:

  • Payment history
  • Amount of money you owe (your debt)
  • Amount of available credit vs. the amount you’ve used
  • Credit mix (different types of loans you’ve taken like mortgage, car, and student loans)
  • New credit you’ve recently secured or applied for


Your payment history contributes 35% to your total credit score, making it the most significant factor. So, if you’ve never taken a loan, you won’t have a payment history, leading to a poor credit score. This is why young people typically have low credit scores, and their credit scores improve as they borrow money and repay it within the stipulated loan terms.

It’s essential to work towards improving your credit score because the higher it is, the better your chances of being approved for loans with good terms. With a high credit rating, you can apply for various loans, including mortgages, car loans, and personal loans at traditional lenders like banks, which are likely to offer lower interest rates and a longer repayment term, depending on how good your credit is.

Loans Types to Consider

Even with a low credit score, there are loans available that you can apply for. Some loans are specifically designed for and targeted at folks with a poor credit score.

It’s a good idea to apply online through a lender network. This allows you to fill in one application, which is then sent to a few lenders. The lenders will look at your application and send you quotes with their terms. You must go through each quote and compare them before accepting.


Bank Verification Loans

You probably will need to spend some time searching for a lender that offers bank verification loans, as this loan type is not that common. Still, it’s an excellent route if you know your credit score is low, but you can afford to repay a loan.

Lenders who offer bank verification loans will request your bank statement from your bank. This gives them access to your account information and personal details, which allows them to verify that the details you’ve provided on your application are correct. Your bank statements also provide them with an indication of your financial health.

They can see how much money comes into your account and how much you spend, which gives them a reasonable indication of whether you can afford to repay the loan without needing a credit check.

Co-Signed Loans

If you’re confident you can repay the loan, another option is to apply for a co-signed loan. As the name suggests, you’ll need to get someone, preferably with a good credit score, to sign the loan with you. If your co-signer has good credit, you’ll qualify for a loan with a low-interest rate and a more extended payment plan.

While the co-signer will not have access to the loan, they will be responsible for the repayments if you don’t pay.

Credit Card

Most people have credit cards, and if you don’t want to apply for a loan, you can use your credit card to access cash. If you use internet banking, you can link your credit card to your checking account, transfer the funds into your credit card, withdraw it from there, or wire the money to whoever you need to pay.

Alternatively, if you want to withdraw cash, you can set up a pin code on your credit card and then withdraw money from an ATM. Setting up a pin code is easy; you can do it online or at the credit card company’s premises.

Keep in mind that the amount you can withdraw or transfer is lower than your swiping amount, and even though it has a separate balance, if you don’t pay it off at the end of the month, the interest will be high.

Payday Loans

Another option is to apply for a payday loan when you need money fast, and your credit score is low. The plus side of this loan type is that it’s easy to apply for, and you can get the cash almost immediately.

On the downside, payday loans have incredibly high interest rates and fees with minimal time to pay them back. You usually have to pay the total amount as a lump sum within two to four weeks or with your next paycheck.

To apply, you must provide proof that you have an income as well as your identity document, banking details, address, and contact number. Anyone over 18 is eligible to apply.






Nerdwallet: Types of Personal Loans