You didn’t want to take out a personal loan. In fact, you’ve been dedicating your energies to improving your personal finances, which, admittedly, haven’t been as sterling as you’d like — including a credit score that doesn’t yet inspire the most confidence from lenders. However, your home needs a repair that can’t wait. Or maybe a medical bill or some other emergency expense has popped up.
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You need a personal loan to help you pay for it, and you don’t have the luxury of applying for one once your credit has improved. While the process of getting approved for a loan won’t be as hopeless as you may fear, it will still be a challenge. Fortunately, there are some things you can do to put the odds more in your favorite.
Make Yourself a More Attractive Candidate
Ideally, you’d be applying for that personal loan with a credit score that was a short sprint instead of a long haul to 850, but that doesn’t mean you can’t make yourself a more attractive candidate to lenders — even with a lower score.
Be prepared to show proof of your income, including money from side gigs as well as a steady gig. Do what you can to lower your debt-to-income ratio before applying. And only apply for what you need, given that smaller loans might be more attainable.
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Shop Around
You might think that you’re stuck with whichever lender is willing to offer you anything, but you’d be surprised to realize that you do have some power to shop around — and that there are some decent options for borrowers with low credit scores.
One of the fastest and easiest ways to find these lenders is to simply search for them online. A simple search for “how can I get a personal loan with bad credit?” yielded an article from CNBC that highlighted lenders who will work with borrowers like you. This list included information about the rate, terms, fees and flexible repayment options, among other data. It even broke down the best loans depending on specific needs (i.e., you need the money fast, you don’t need much money, you’re starting a business).
If you’ve been working with a financial advisor to improve your situation, you should also ask for their input as well.
Look Into Credit Unions
When GOBankingRates explored the best kinds of personal loans for people with low scores, reporter Cindy Lamothe found that “credit union loans are absolute gold mines for bad credit borrowers.”
In her reporting, Lamothe talked to Andrew Lokenauth, money expert and owner of BeFluentinFinance, who shared that, since credit unions are nonprofit, they can generally offer rates that are about 2% to 3% lower than what traditional banks can do. He’s even helped clients with scores around 580 get approved through credit unions.
Investigate Secured Personal Loans
Lokenauth told Lamothe what he generally tells his clients — that secured personal loans can be their best bets, and that they should consider using their cars or savings as collateral. He shared the story of a client who used their paid-off car as collateral on a $10,000 personal loan at 8% interest, which was far more doable than the interest options via unsecured loans, a staggering 25% or more.
Don’t Get Taken in by Predatory Lenders
With a little research, you can find a loan that will suit your needs — without adding more financial hardship to your life. Resources like payday loans seem easy enough, but they often come with massive APRs that will only compound your frustrations. You should also be leery of loans with unclear terms, whose lenders use aggressive sales tactics and try to hustle you into signing on the dotted line before you’ve had a chance to review the terms.
Just because you’re still working on improving your credit, that doesn’t mean you don’t deserve a loan that will help you meet the moment at hand, without complicating your circumstances.
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This article originally appeared on GOBankingRates.com: Facing an Emergency With Bad Credit? Get the Loan, Skip the Stress
