How to Get a Loan with Bad, Poor, or Fair Credit

If you don't have perfect credit but need to borrow money to cover an expense, there are options at your disposal. Some loans don't require you to have excellent or even good credit. These loans are offered by lenders who consider other factors when deciding whether or not to approve you. Let's dive deeper into loan options that are available for people who may have fair credit, poor credit, or bad credit.

Are there loans for people with poor or bad credit?

There are some personal loans from lenders who lend to borrowers, even if they don't have excellent or good credit. At Advance America, we call them personal loans, and people of all credit types (good credit, fair credit and bad credit) are eligible to apply. When deciding whether or not to extend a loan offer, they may look at other factors such as your ability to repay a loan and your debt-to-income ratio.

What qualifies as bad credit?

Having bad credit usually means that you have a lower credit score. The FICO credit scoring system ranges from 300 to 850. According to FICO, a poor credit score typically ranges from 300 to 579, and a fair credit score ranges from 580 to 669.

Can a loan help improve your credit?

Getting a loan may help boost your credit score if you make your loan payments on time. Avoid making late payments if you can, as they can bring down your credit score if your lender reports these payments to the credit bureaus. Your payment history is a big factor that determines your credit score, so having a record of on-time payments can help improve your credit over time.

Types of loans for customers with bad credit, poor credit, or good credit

Here are some types of loans that you may be able to get approved for with bad credit, poor credit, or good credit.

Secured loans

To take out a secured loan, you must have collateral like a house or car. Since a lender can still recoup their money from collateral if you don't repay what you owe, secured loans are less risky for lenders.

Title loans (which require your vehicle's title) and pawn shop loans (which involve a valuable item like a diamond ring or power tool) are examples of secured loans.

Unsecured loans

With an unsecured loan, you don't need any collateral. The caveat, however, is that it will likely come with a higher interest rate than a secured loan as it's riskier for the lender.

Traditional bank loans, installment loans, lines of credit, and payday loans are all unsecured loans.

How to choose the right loan for borrowers with bad credit

Here are some factors borrowers can consider when choosing the right loan for bad, poor, or fair credit:

Interest rates and fees

When comparing loans, you should look at interest rates and fees. Choose a lender that offers loans for bad, poor, or fair credit with interest rates you can afford.

Repayment terms

Loan repayment periods can last from a few weeks to a few years, depending on the lender and loan terms. If you choose a loan with a shorter repayment period, you may be able to pay it off more quickly and pay less in interest. Loans with longer repayment periods, on the other hand, may come with lower monthly payments. You should choose a loan with a repayment period that works for you.

Eligibility requirements

Check out the eligibility requirements when comparing loans for borrowers with bad, poor, or fair credit. Even though these lenders may have lenient credit score requirements, they may only approve borrowers if they meet requirements like a minimum income level or maximum debt-to-income ratio. Make sure you choose a loan with eligibility requirements you can meet.

How you can get a loan with bad, poor, or fair credit

Here’s how you can get a loan today if you have bad, poor, or fair credit:

1. Compare loans

Before applying for a loan, do some online research to compare different lenders and loans. Make sure that the lender you choose is legitimate and has good ratings. Advance America offers safe online loans that will keep your information secure, with an A+ Better Business Bureau rating.

2. Gather your financial documents

Whether you’re applying for a loan online or in-store, make sure you have all financial documents needed to complete your application. Your lender may require information such as a source of income, in addition to your checking account and social security number.

3. Fill out an application online or in-store

Once you’ve decided on the loan and lender of your choice and have your financial documents ready, you can start the application process. Advance America lets you apply online or in-store, with a quick and easy application.

4. Receive cash quickly, if approved

Many online lenders have a quick approval process, and you may get an instant decision after you submit your application. If you’re approved for a loan, you’ll receive the cash you need quickly. Advance America offers an approval decision within minutes, and you may be able to receive the funds in your bank account that same day.

How to improve your credit rating

Improving your credit score can increase your chances of securing a lower interest rate with more favorable terms. Here are a few ways you can boost your credit rating:

Pay your bills on time

Make it a priority to pay your mortgage, rent, utilities, and other bills on time, every time. Even one missed payment can lower your credit score and stay on your report for seven years.

Pay off your credit card balances

If you have credit card balances, pay them off as much as you can to shrink your debt. This will reduce your credit utilization ratio (the amount of credit you have divided by the amount that's available to you). A lower credit utilization ratio can lead to a higher credit score.

Check your credit report

Visit AnnualCreditReport.com to get free copies of your credit report from the three major bureaus: Experian, Equifax, and TransUnion. Take a close look at your report and dispute any errors or inaccuracies you may find. You should also take note of any of your previous credit behavior that is marked as a negative resolution to ensure you don't make that same mistake in the future.

Maintain a good credit mix

A good mix of credit is better for your credit score than only having one type of credit. There are many different types of credit available to you, even if your credit score is low, including credit cards, mortgage loans, retail cards, installment loans, and payday loans. If you need to borrow money, make sure you diversify how you do so.

Advance America has loans for customers with bad credit

Advance America offers a variety of short-term loans that are options for people of all credit types. Even if you don't have good or excellent credit, you could be approved for a loan. From title loans to payday loans, we have a number of options to help you with your unique financial needs. Apply for an Advance America loan today.

CUSTOMER NOTICE: There are a wide variety of loan products available in the marketplace, so your choice of lending products should match your financial needs. Small-dollar loans used over a long period of time can be expensive.