Authored by Rodney Southern in Loans
Published on 03-05-2009
Personal loans for people with bad credit are available but they are just a bit more difficult to find and qualify for. Those who are considered to have bad credit will have a FICO score at or below 580. Even those with a FICO score of up to 619 can be considered to have bad credit.
Most banks do not want to risk losing money by giving a personal loan to someone with bad credit. Sometimes those with bad credit have just run into hard times, and sometimes those with bad credit are simply irresponsible. Banks don’t care which category you fall into. All they care about is your credit score when determining whether they should give you a personal loan or not.
Personal loans for people with bad credit will typically have some pretty tough conditions and high interest rates. Banks don’t mind making money off you just to help you get your credit back on track. Those with bad credit that actually get a personal loan will often need some type of collateral as well as pay a high interest rate.
Personal loans for people with bad credit will often require a cosigner with good credit. A cosigner is needed as a backup and will become responsible to repay the loan if you cannot. This is a way to get a personal loan with bad credit, but since you risk damaging someone else’s credit you must make sure that you can pay the loan back to the bank.
If you have bad credit and desperately need a personal loan, you may need to use something you own as collateral. Examples of these are your home, a vehicle, or some other type of valuable asset. Putting something up as collateral may help you to get a personal loan, but if you are unable to pay back the loan, the bank will seize whatever you put up for collateral. Once a bank seizes something it is extremely hard to get back, so make sure you can pay off the loan.
Many people with bad credit are getting personal loans from payday loan services. This is an easy way to get a personal loan, but it can be very costly. Most of these institutions only require you to make at least $1,000.00 per month and have an active checking account at a reputable bank to qualify. These institutions charge some hefty interest rates and will garnish your wages if you do not repay the loan.
Personal loans for people with bad credit are possible to get, but they are generally not worth it. Those with bad credit have very limited options when it comes to getting a personal loan, but if it is absolutely necessary you can get one. The most important thing is to make sure that you can pay back that loan. If you do not, your credit will only get worse and make it even more difficult to get a personal loan in the future.