Bad credit but need a personal loan? Conventional creditors might not consider you. However, even with poor credit history, there are several ways in which you can secure a loan.

Do Not Take Out a Payday loan

First, a warning, in whatever you do, resist the urge of having to take out a Payday loan. Even though the idea of fast cash is tempting, but you will be paying back in a very astronomical rate. An average of about 400% plus fees.

There is a reason why these predatory terms are illegal in many states. So instead of taking out a payday loan, consider taking a credit union.

Credit Union

Credit union offer services similar to banks, but are owned by members and are not-for-profit institutions. So they are most likely look past your bad credit history, considering factors like your character as well.  Look for credit unions that are linked to perhaps your local community or your employer’s credit union, or the professional ones like those made for teachers and military.

If you’d instead stick with the bank, consider asking a family member or friend to be a co-signer on your loan.

Seek for A co-signer

The lender will calculate the rate based on the person with better credit. Just know that your co-signer is doing you huge favor because the loan payment information is recorded on both of your credit scores. So if you default or delay to repay, you’ll affect their credit score too, and trust me, that’s not fair for someone that just wanted nothing but to help you out.

Leverage your Asset

Some lenders will offer what’s called a “secured loan,” a type of loan that you borrow against the things you own. Either material things like a house, car, or boat or in some cases, assets like stock.

Secured loans are determined based on how much equity you have in the underlining asset. So your home is the collateral most likely to be approved. But if you default on the loan, you’ll lose that asset.

Finally, there are a few other options like unsecured loans, personal loans, and peer-to-peer lending. But perhaps the best tip is to improve your bad credit. So, hold your credit report to learn where you stand, make smaller payments like half every two weeks, instead of once a month, and do it on time.

Don’t close your credit card and other accounts. Having credit, you don’t use, help your score. Just as an account with a long history. Debt consolidation can also help. It takes 3-6 months of good credit behavior to boost your score, but for the effort is always worth it. And if you need a loan in the meantime to promote it, know that there are options even for those with a bad credit score.

All you have to do is avoid taking out a payday loan, instead, go to a credit union or look for a co-signer who already has a good credit score.

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