Can You Get A Personal Loan With Bad Or Fair Credit In 2018?

Everybody has it rough from time to time, especially when it comes to money. Personal finance is definitely one of the most difficult areas of life to manage and be an expert in.

However, this doesn’t mean that you should give up altogether and let your finances flow uncontrollably. As the matter of fact, even if you wanted to do this, you couldn’t do it for a long time since your life would automatically turn into a complete mess.

That is why you should always pay attention to your budget and credit score. And what is even more important, whenever you need financial help, don’t be afraid to look around and ask for it.

One of the means of financial help is a personal loan. If you have bad or fair credit, some people might tell you that it is impossible to find an affordable loan. Don’t listen to them because this is simply not true.

While it might be more difficult for you to find an attractive loan if you have a bad or fair credit score, it is far from impossible. If you are in such a situation, read this article to find out how to get a personal loan and what your best options are.

What Is a Bad and What a Fair Credit Score?

According to FICO score range, which is the most widely used credit score range, fair credit falls between 580 and 669 points. On the same scale, bad credit ranges from 300 to 579 points.

Your credit score is a result of your payment history on loans and credit cards, total debt and amounts owed, length of credit history and other less influential factors.

It is important to understand that you are the only person who makes an impact on your credit score. Therefore, if you have a good credit score or higher, make sure you do all it takes to keep it that way. It is much easier to get a loan with a good or excellent score as you have many more options to choose from.

Still, even if you have a bad or fair credit score, you can do a lot to improve it, which we will mention later in the article. If you don’t need money urgently, we advise you to improve your credit first so that you can get a loan with much better terms.
However, if you are in dire need of cash, you should start searching for personal loans from providers like SoFi that are ideal for those with fair or bad credit.

So, Can You Get a Loan with a Bad or Fair Credit?

The answer is definitely yes. There are a number of personal loan opportunities for all of you who have bad or fair credit scores.

Just a few years ago, it used to be different. People would get ripped off when they applied for a loan and loan sharks would make a huge profit on financially vulnerable people. However, things have changed and the lending market has become much more flexible.

The main reason for this is the fact that there is an increasing number of lenders and this competition results in the much greater flexibility of the market. Another reason is that lenders have gradually started to realize that they should look at more factors when determining whether to approve you for a loan. Yes, credit score is important, but so is your financial situation, credit history, income and education.

This flexibility means that you can get a loan much more easily even if you have bad credit. Some lenders will require a minimum credit score and debt-to-income ratio but some won’t. Some will look at other factors too. Also, since there are many more lending companies, they can offer better terms, including a lower APR and a higher loan amount.

Finally, the lending market has started to encourage niche lending. This means you can choose the lending company according to what you need money for. Some of them focus on debt consolidation, some on car loans, some on mortgages and so on.

So, it is up to you to use this to your advantage. To do this, you should research all of the options and shop around. Compare all the companies that you have shortlisted and take your time to decide which one you think is the best fit.

Personal Loans

Some of the best fair credit options are offered by Upstart, PersonalLoans, Prosper and other companies. Most of these companies will also work with people who have a bad credit score.

As we said, the lending market is rather flexible nowadays, which means that you can find numerous online lending companies. In addition, you will get more offers, receive them faster and on better terms. One of the most important things is the fact that this flexibility has brought about increasing transparency in loan contracts.

Finally, it is common practice for lenders to lower your APR and increase the amount of the loan if they see that you are paying the loan on time and increasing your credit score.

If you want to get even better loan terms (a lower APR and a higher amount of money) you should consider getting a co-signer or guarantor. If you have a bad credit score, lenders will usually look for a way to reduce the risk of not getting their money back. In this case, a co-signer or guarantor, who is usually a friend or a family member, will practically guarantee that they will pay back the money if you default. Keep in mind that they have to have at least a decent credit score in order for the lender to accept them. Also, it is essential that you realize that they are as responsible for the loan as you are. Therefore, think twice before deciding to get a co-signer or guarantor, especially if you are not sure that you can pay the loan on time.

Another option is to get a secured loan. This means that you pledge your car or property as collateral for the loan. This helps lenders in case your credit score is not stellar. When you put something as collateral, they are more likely to trust you that you will pay the loan back on time.

Personal Loan Alternatives

If you don’t think that personal loans are a good option for you, you can always look for more alternatives.

You can find a number of peer-to-peer lending companies online that can give you great offers. This method is paperless, transparent and fast. You will get much lower interest rates compared to those that banks offer. Also, there is no need to secure your loan and you remain anonymous to the lender as you only have contact with the peer-to-peer lending platform. P2P loans are the best if used for short-term loans, debt consolidation and home improvement.

Another option to consider is credit unions, which have helped a lot of people get out of debt. These institutions are owned by their members and they offer great fees and rates. You will also enjoy more attention as a customer, discounts and faster transactions.

Credit cards are also something to keep in mind and can be very useful if you know how to use them. Similar to personal loans, you need to shop around in order to find the best card for your situation. But you also need to be aware of the fact that interest rates and fees can be rather high if you fail to pay the installments on time.

Finally, if you don’t trust personal loans, banks are always there for you. However, they are much less flexible than personal loans. Still, they can give you more options and they allow for cash deposits.

Stay away from Payday Loans

Whatever you do, stay away from payday loans.

These are short-term unsecured loans which need to be repaid on your next payday. The loan period is generally from 15 to 31 days and the average APR is 400%.

What is characteristic of payday loans is the fact that lenders usually don’t perform a credit inquiry or ask for income history before approving the loan. Their goal is to lend you money on insane terms so that they can get you into a debt cycle. They achieve this by charging only the rates on the next payday in case you are not able to repay the entire loan. However, on the next payday, you will need to pay the rates again plus the loan amount (if you are able to). This is called a debt cycle and is very common to payday loans.

Our advice is to avoid payday loans, especially if you are not sure that you can pay back the entire loan (plus rates) on the next payday. There are many other options to choose from and we are sure you can find a good loan for your needs.

How to Improve Your Credit Score

As promised, we will now give a list of tips on how to improve your credit score. If you don’t need money right now, it is much wiser to improve your score before applying for a loan. This way, you will definitely get much better terms and be able to pay it back more easily.

These are some ways to improve your credit score:

-          Check your credit report regularly. In order to improve your credit, first you need to know what it looks like. This will also show errors on your report if there are any.

-          Set up payment reminders. This will let you know when your payments are due. You can also enroll in automatic payments so that you don’t have to worry about your next payment date.

-          Reduce your debt. The more you owe, the worse your credit is. Plus, the relief that you will feel with each debt reduction is priceless.

-          Pay your bills on time. Each payment delay has a negative impact on your credit score. If you have missed payments, get current and stay that way.

-          Make sure you pay off your debt instead of moving it around. The easiest way to do this is by paying your revolving debt first.

-          Apply for new credit accounts only if you need them. The same goes for new credit cards and other short-term fixes. Instead, think long-term and be patient.

Bottom Line

Apparently, it is possible to get a personal loan if you have a bad or fair credit score. The lending market is becoming more and more flexible because of the increasing competition between lenders. This allows borrowers to be pickier and choose only the loan that works best for them.

If you take your time and shop around, you can get better terms on your loan, including the APR, interest rate, fees, loan amount, loan period, etc. You can also find a guarantor or co-signer if you want to get a more affordable loan. However, you need to be sure that you will pay down the loan on time in order not to harm your relationship with this person. Also, a secured loan is an interesting option if you are sure that you can pay the loan and you have something to put as collateral.

On the other hand, in case personal loans are not your cup of tea, there are a number of alternatives. Banks, credit unions, peer-to-peer loans and credit cards can all give you that extra cash boost that you need. But whatever you do, avoid getting a payday loan as it will do you much more harm than good.

Finally, if you have time to improve your credit score before taking out a loan, then, by all means, do it. Once your credit score is good or very good, you will be able to get much more attractive loans, which means a higher a