Bad credit refers to a person’s history of not paying bills on time and the likelihood that they will fail to make timely payments in the future. It is often reflected in a low credit score, typically under 580 on a scale of 300 to 850. Having bad credit makes it difficult to borrow money, especially at competitive interest rates.
Most Americans who have ever borrowed money or signed up for a credit card will have a credit file at one or more of the three major credit bureaus, Equifax, Experian, and TransUnion. The information in those files, including how much money they owe and whether they have paid their bills on time, is used to compute their credit score, a number that’s intended as a guide to their creditworthiness.
Top Lenders To Get Personal Loan With Bad Credit
If you have bad credit, getting a personal loan can be challenging. However, there are still lenders who are willing to work with you. Here are the top 5 lenders that offer personal loans ranging from $2,000 to $10,000 for people with bad credit:
- OneMain Financial: Offers secured and unsecured personal loans with APRs ranging from 18.00% to 35.99%.
- Mariner Finance: Offers personal loans with APRs ranging from 24.00% to 36.00%.
- OppLoans: Offers personal loans with APRs ranging from 59.00% to 199.00%.
- MoneyLion: Offers personal loans with APRs ranging from 5.99% to 29.99%.
- Possible Finance: Offers personal loans with APRs ranging from 150.00% to 200.00%.
Please note that these lenders may have additional requirements and fees. It’s important to compare multiple offers to make sure you’re getting the best deal. You can also consider other options such as credit unions, peer-to-peer lending platforms, and family and friends.
Disadvantages Of Having A Bad Credit
Having bad credit can have many negative repercussions.
Here are some of the possible consequences of having a low credit score:
- Difficulty getting approved for loans: Banks and other financial institutions may be hesitant to lend money to people with bad credit. If you do get approved, you may have to pay higher interest rates to make up for your greater level of default risk.
- Higher insurance premiums: Insurance companies often use credit scores to determine the premiums they charge. People with bad credit may end up paying more for auto and homeowners insurance.
- Difficulty getting a job: Employers may run a credit check before offering you a job, especially if you’re applying for a management position or one that involves handling money. Having bad credit could disqualify you from certain jobs.
- Problems getting utilities: Utility companies may require a deposit or a co-signer if you have bad credit. You may also have to pay higher rates for your utilities.
- Greater debt and fewer savings: People with bad credit may have to rely on high-interest credit cards or payday loans to make ends meet. This can lead to a cycle of debt that’s difficult to break out of. It can also make it harder to save money for emergencies or retirement.
It’s important to note that these are just some of the possible consequences of having bad credit. If you’re struggling with debt, there are resources available to help you get back on track. You can consider working with a credit counselor or a debt management company to develop a plan to pay off your debts and improve your credit score.
How To Boost Your Credit Score
There are several ways to improve your credit score. Here are some tips:
- Pay your bills on time: Payment history is the most important factor in determining your credit score. Late payments can have a significant negative impact on your score.
- Reduce your credit utilization: Credit utilization is the amount of credit you’re using compared to your credit limit. High credit utilization can hurt your credit score. Experts recommend keeping your credit utilization below 30%.
- Check your credit report for errors: Errors on your credit report can hurt your credit score. You can get a free copy of your credit report from each of the three major credit bureaus once a year. Review your report carefully and dispute any errors you find.
- Become an authorized user: If someone with good credit adds you as an authorized user to their credit card, their good credit behavior can help boost your credit score.
- Apply for credit sparingly: Applying for too much credit in a short period of time can hurt your credit score. Only apply for credit when you really need it.
In conclusion, a credit score is a numerical representation of your creditworthiness. It is calculated based on your credit history, payment history, credit utilization, and other factors. A good credit score can help you get approved for loans, credit cards, and other financial products at competitive interest rates. On the other hand, a bad credit score can make it difficult to borrow money and lead to higher interest rates and fees.
If you have bad credit, there are still lenders who are willing to work with you. However, it’s important to compare multiple offers to make sure you’re getting the best deal. You can also take steps to improve your credit score, such as paying your bills on time, reducing your credit utilization, and checking your credit report for errors.