Since there are so many different types of personal loans out there, the qualifications for them will vary. With some personal loans, you may be approved even with a poor credit score (600 and below). Common personal loans for borrowers with low credit scores include payday loans, title loans, personal installment loans, and more.
Your credit score will affect your finances and your future in more ways than one. Having a low credit score tells lenders that you may not be a trustworthy borrower. This often leads to higher interest rates, more stringent qualification requirements, and possibly lower loan amounts. These are ways that lenders protect themselves from risk when it comes to lending you money.
But even borrowers with bad credit can be approved, depending on the lender and the loan in question. Some loan products are designed for borrowers with poor credit scores. These loans may be called bad credit loans. A payday loan online, for example, is one of these loans. Many people who take out payday loans aren’t able to get a loan from a traditional lender or a bank because of their credit score.
A payday loan is a short-term loan (usually two weeks), where the borrower receives a small amount of cash and pays it back plus interest and fees on their next payday. These loans can carry high interest rates, so make sure you can repay them before considering one.
A title loan is another type of loan that falls into this category. This is a secured loan where the lender takes the title to your vehicle and gives you cash based on a fraction of the value of the vehicle. The risk here is that not repaying the loan means the lender can keep your vehicle and sell it.
A personal installment loan is commonly considered to be a good alternative to the previously mentioned loans. You may be able to get a larger amount of money, and repayment lasts much longer (anywhere from a couple of months, up to a couple of years). And the best part is that you don’t need an excellent credit score to be approved for one.
Credit Education & Credit Reporting