If you have bad credit, it could be from making poor financial decisions or a streak of bad luck that was beyond your control – job loss, divorce, expensive repairs, etc – and now you are faced with needing to take out online personal loans for bad credit. You may ask yourself if it’s even possible to get short term loans online with bad credit?

The answer is YES! Life is full of financial surprises, and sometimes the only way you can handle a financial emergency is by getting a bad credit loan. The lower your credit score, the more challenging it may be to find a lender who will approve you for a loan. But there are PLENTY of lenders who are in the business of writing personal loans for people with less than perfect credit. You can even find a lender who will approve you for a bad credit auto loan online.

Do you know what your credit score is? If you haven’t check in a while, you may find out that it’s not as bad as you think. However, if it is bad, there is still a good chance you can get approved for a personal loan!

Once again, it is absolutely possible to get online personal loans for bad credit. You may need a loan to pay for unexpected medical bills, major home repairs, vehicle repairs, or any number of reasons. Luckily, just because you have bad credit, it doesn’t have to stop you from taking care of certain necessities that come up.

How to get personal loans for bad credit
If you are wanting to get a bad credit personal loan, here is a little bit of guidance:

  • View Credit Report & Credit Score: You may want to pull your credit report to review any potentially incorrect information being reported that could be negatively impacting your credit profile. Dispute any appropriate items quickly so it can be corrected, thus improving your credit score. Also look at your credit score so you will have an idea of where you stand.
  • Gather Personal Information: You’ll want to get all of your information together, including your social security number, driver’s license number, and employment/income information so that when you are ready to apply online, it won’t take more than a couple of minutes.
  • Submit Application: Once you’re ready, complete the application and submit for processing. Usually on bad credit loans, lenders do a soft credit check so it doesn’t ding your credit score.
  • Review & Accept an Offer: Within a minute or two, you will receive one or more loan offers. Review the terms of each offer, paying close attention to the loan amount, interest rate, length of repayment period, due date, fees, etc. Once you are happy with the terms of the loan, accept it so it can be processed for funding.
  • Approval: When you are approved, you will receive the funds directly to your checking account within 1-2 business days, depending on the lender. 

Now, if your credit score is very low, your options for a personal loan may be fairly limited.  However, if you use a site like INeedHelpPayingBills.com, you will very likely have a lot more luck than if you used a regular bank or loan company. That’s because this site will connect your application with an entire network of subprime lenders who are willing to make short term loans online to borrowers who have lower credit scores.

Expectations for short term loans
These lenders are in competition with each other to lend money to you, so you will likely receive one or more offers rather quickly, usually in less than 2 minutes. You can review these offers and decide which one makes the most sense for you. Usually an offer will be for a loan amount between $500 to $5,000 with an APR range of 4.99% up to 35.99%, with monthly repayment terms from 90 days up to 3 years. You can view other benefits of short term loans online

After you choose an offer you like, simply accept it and wait for the funds to be direct deposited to your bank account, which could be the same day but is usually by the next business day. Another great site that operates in the same way is NextDayFinancial.com.

Your credit score
How do you define what bad credit is? Well, you may think you have bad credit, especially if you are frustrated with yourself or your financial situation, but it really may not be as bad as you think. Technically speaking, bad credit means your credit score is below 580.  In fact, here is a chart that shows the FICO credit score ranges:

Excellent:  800+
Very Good:  740-799
Good:  670-739
Fair:  580-669
Poor/Bad:  Below 580

Credit scores are numbers that lenders, banks, credit unions, financial institutions, landlords, mortgage lenders, and others use in order to gauge your financial stability, credit history, and activity. For example, if you have several credit cards that are maxed out and you haven’t been making your payments on time, then your credit score will suffer and fall well below 580.  On the other hand, if you only have 1-2 credit cards with small balances, timely payments, and your loan payments are automatically drafted from your checking account each month, then your credit is very likely in great shape and well above 580.

You want to be especially careful when applying for loans or credit cards, because each inquiry could drop your score by as much as 10 points. This may not seem like much, but if you have a few recent inquiries, it could be the difference between getting approved or denied for a loan or credit card.  Often times it is better to get a pre-qualification when possible, because that only requires a soft credit check and is not treated as a hard inquiry, so it will have no impact to your credit score.

Having bad credit can get in the way and keep you from being able to do some of the things you’d like or need to do. It may be challenging to buy a house, rent an apartment, get a credit card, or any other type of credit you may need.  However, there are some things you can do to improve your credit score.

Clearly, if you raise your credit score, it will be a lot easier to get a loan with bad credit. You don’t have to raise it significantly to make a big difference either! If you raised it from a “bad” 570 to a “fair” 610, that can result in a huge improvement in the terms of a loan, including a better interest rate. This would obviously save you a lot of money during the repayment period.

Sometimes you need money now and don’t have time to try and bring your credit score up, and that’s completely understandable. You may need help paying bills asap! Emergencies come up, and there’s nothing you can do about it. However, if you know that you can put off getting a bad credit loan, it would really pay off if you could give your credit a little bit of a boost before applying for a loan.

How to raise your credit score
There are several important things you can do that can help improve your credit score. Try and keep a positive attitude and know that having bad credit can be a temporary situation if you just put a little effort in to making it better!  Here are a few ideas:

  • Become very familiar with your credit report: Go ahead and get a free copy of your credit report. Review it very carefully and look for anything that may not be correct or anything that could be fraudulent activity. Dispute these items as quickly as you can. Once they are removed or corrected, your score can increase very quickly!
  • Always pay on time and make frequent payments: Late payments can be one of the worst things for your credit score. Do whatever you can to make your payments on time, even if you need to setup automatic payments. Also consider breaking down the payments in to smaller and more frequent payments. This can increase your available credit at a faster rate, thus improving your credit score.
  • Don’t close accounts: Some people think they should close an account as soon as they pay it off or if they’re not using it. This is not the best idea because your credit score can actually improve just from having open accounts for several years. You could just use it occasionally and pay it off in order to keep it active
  • Don’t use all or most of your available credit: This is true even if you pay it off on time. Part of the credit score algorithm includes your credit utilization ratio, which is your outstanding balance vs. your total credit limit. You should try to get this below 30% as soon as you can. Below 10% is even better!
  • Try to avoid anymore credit inquiries for awhile: If you’ve been applying for a lot of loans or credit cards, these frequent credit inquiries can lower your credit score in a hurry. If at all possible, you need to seriously limit how often a company pulls your credit.

Unsecured personal loans
As mentioned earlier, even if you have bad credit, it is absolutely possible to get a personal loan. In most cases, it will have to be unsecured, which means the interest rate may be significantly higher than if you were able to go to a bank or credit union and get a secured loan.

An unsecured loan doesn’t have any collateral backing up the loan. This means you’re not risking your house, car, boat, jewelry, or any other assets if you are unable to pay the loan. For this reason, it is much riskier for the lender to give you a loan. To compensate for the lender’s risk, they will charge a higher interest rate. Bad credit loans are almost always unsecured. Since the borrower hasn’t been very creditworthy, this gives another reason as to why the interest rate is higher.

Once again, you can get unsecured online personal loans with bad credit.  In some cases, an unsecured loan is the only product a lender will offer someone with a credit score below 580. If you have bad credit and find a lender who will approve a secured loan for you, you should take very careful consideration in to whether or not you will be able to repay the loan. You don’t want to risk losing your home or car just to get a better interest rate on a bad credit secured loan. If there isn’t a financial emergency, it might be better to work on improving your credit score and getting an unsecured loan in a couple of months once your credit score has improved.

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Mike Lombardi, MBA

Mike Lombardi, MBA

Personal Finance Expert

Mike Lombardi earned his bachelor’s degree in Finance, as well as his MBA in Economics. He has been in the personal finance industry for 24 years. He spent 12 years working for a large bank as the loan operations manager before switching gears and managing client portfolios at a small wealth management firm. He enjoys helping people develop and implement a personal budget, formulate a strategy to improve their credit scores, and show them how to work towards becoming debt free by designing a debt reduction plan unique to each person’s situation.