Getting a Loan With Bad Credit

If you are in the unfortunate situation of having not built up your credit yet and you need to secure a loan, there is still hope. Although the options are much more limited and rates may be higher, there are still options that are not terrible. However there are many traps out there preying on those who do not have many options so it is always a good idea to do your research before signing at the dotted line.

What is Considered Bad Credit?

Before you go to the lengths of securing a loan with a bad credit score, make sure that you have obtained a detail credit report. Oftentimes there can be errors on your report that may need to be fixed before applying for a loan. One such error on your credit report can end up costing you thousands of dollars in interest so it is well worth your time to sort out these errors before obtaining a loan. If there are no errors on your credit report, there are still options for obtaining credit.

Try a Credit Union or Online Service

Credit unions are well known for working with those in the community in their personal finance needs. By visiting a credit union, you are most likely to be speaking one on one with a loan officer who will be able to consider all of your factors, and not just your credit score.

Other online service are well known for their willingness to work with individuals and not just look strictly at your score.

P2P Lending

This is a concept that has recently been gaining a lot of traction. There are multiple websites out there that offer these services. In these scenarios you are borrowing money from individual people instead of major banking institutions.

Friends & Family

If you don’t like the idea of borrowing from strangers, it may be worth your while to try friends and family. This can be done without ruining relationships if it is done correctly. It is important to spell out in detail the intricacies of the agreement so that there is no confusion which may lead to a broken relationship. Another option is to have a friend or family cosign for you on a loan.


If you have no cash assets to your name and your credit score leaves much to be desired, you may be able to secure a loan by offering up collateral. This is done by taking something of value such as a house or a car and pledging it as collateral in the event that you default on your loan. This is a bit of an extreme scenario but it should definitely be considered if your options are limited.


As is the case with any major decision that you may make, it is always a good idea to thoroughly research your options before making a final decision. There are plenty of institutions that prey on those who may not know any better so in order to protect yourself, know all of the conditions before committing to a loan.

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