Loan Options for People with Bad Credit

Can you imagine a world in which you had zero debt? For the average American, this dream doesn't even exist. It seems so far from reality that many people have simply stopped considering it a possibility. And it's no wonder, with nearly half of all Americans carrying an active balance on a credit card that they have no intention of paying off.

Not only is this number of credit card balance holders growing at an alarming rate, but so is the number of people with bad credit. According to, 61 million people have credit scores considered "sub-prime," or below 649. It's a sad state of affairs, really.

Now, odds are that if you're reading this blog post, you might fall into the bad credit category mentioned above. And that's okay. There's no use in crying over spilt milk here. The only thing you can do is work to change it.

What if You Need a Loan AFTER Your Credit Tanks?

Just because you have bad credit doesn't mean you aren't going to need financial assistance from time to time. In fact, quite the contrary. However, as you can imagine, getting a loan with poor credit isn't the easiest thing in the world. Luckily, when you go with a company like, you still have plenty of loan options, despite the financial scarlet letter. Here are a few of those options:

1. 1st Lien Loans—While credit score does play a factor in this loan, it's not the sole determining factor. In fact, it isn't that big a factor at all. This loan is kind of like a title loan, in that your car's value is the collateral. It's quick and convenient, albeit not the lowest interest rate.

2. Signature Loans—Signature loans often come in smaller amounts, usually up to about 500 bucks. While this may be a drawback for some, the benefit is that you have a decent amount of time to pay it back. You can also get approved pretty quickly. Documents required include a government identification card of some sort, a pay stub, and a checking account.

3. Payday Loans—Payday loans can be bigger than signature loans. However, you have to pay them back by next paycheck or experience more harsh interest rates. If you KNOW you'll be able to pay it back, this may be right for you.

A Bit of Advice

If your credit is in the dumps but you absolutely have to get a loan, take a look at some of this additional advice:

1. Find a company with a liberal credit policy. Some companies are more strict than others. Depending on how bad your credit is, you may end up having a difficult time getting a loan, regardless of where you go. Don't worry. You will always find someone who is willing to loan you money. After all, giving out loans is a money making endeavor.

2. Make this your first step to rebuilding your credit. It may seem contradictory, but a loan can actually help you build credit. Or rebuild, as the case may be. The idea is that you want to establish a good history of repaying a loan. When Credit Bureaus see that you are responsible in paying back loans, they will eventually raise your credit score. Of course, the opposite is true, as well. Failing to repay a loan will only bury you deeper.

3. Consider family and friends. Sometimes getting a loan from a business is not in your best interest. In this case, you may consider turning to family or friends. If there is someone in your life willing to help you out, you might want to take them up on it. However, remember that money is a great (terrible) way to put strain on a relationship. You need to make sure you set official terms for the personal loan. Beware of the "just pay it back when you can" mentality. No matter how nice the friend or family member might be, it almost always ends up creating a rift.

4. Speak to a professional who can help you find the right loan for your situation. This article is merely intended to give you advice. Your best bet is always to speak with a professional. Not only should you consider help with choosing the best loan, but you also may want to get professional advice in rebuilding your credit. In that case, consider looking here.

An article published on behalf of Mr. Preston Crouch. Preston is a financial advisor's assistant, currently working on his degree at the University of Houston. He has a passion for personal finance and is looking to embark in a full time career helping people get out of the rat race, so to speak.

If you have any questions, please ask below!