Can You Get a Personal Loan with Bad Credit?

Bad credit personal loans have flooded the consumer market over the past several years. Lenders and creditors have demonstrated that they are still willing to extend personal loans to people with bad credit, but there is definitely a price to pay. However, just because you have some blemishes on your credit report or an uneven income stream does not automatically disqualify you from some type of credit or personal loans, even in today's economic climate. What is considered "bad credit"? A FICO score of 580 or below is definitely a bad credit score. FICO scores of 580 to 619 are considered low scores.

That said, the conditions under which you can contract for bad credit personal loans can vary significantly. If your credit rating is horrible, or if you've demonstrated creditor malfeasance recently (e.g. filed for bankruptcy), you may find that your options for personal loans are quite limited. It may be possible to qualify for a high interest or restricted credit card rather than a personal loan if you find yourself in that situation. It definitely pays to shop around, however keep in mind that each time a lender pulls your credit report, it is recorded. And multiple credit checks can actually have a negative impact on your credit rating. If you have a recent copy of your credit report, it would be a good idea to discuss it with a potential lender before they pull their own copy of your credit report. If they can't help you, at least they won't be making your situation worse by asking for an unnecessary credit report.

Unsecured personal loans will come with extremely high interest rates. Unfortunately, many indebted Americans find themselves in a snowball situation, where debt begets debt, and the high interest rates and additional fees can be higher than your minimum monthly payment, quickly getting you in a situation where you've maxed out your credit limit and now they're adding "over limit" fees to the monthly charges.

Bad credit personal loans can be powerful tools for accessing quick cash in an emergency, allowing you to pay off something with an even higher interest rate, or to pay for something unexpected. But these kinds of personal loans also can put you at higher risk for default and mismanagement. In fact, experts in personal loans recommend that individuals with bad credit take an active part in clearing up their credit first before considering more high-cost debt.

The key to wisely managing a personal loan with bad credit, or credit cards for those with bad credit, is to crunch the numbers and determine how quickly you will be able to repay that debt. Many borrowers with bad credit look at the bottom line -- how much can I afford to pay each month -- and they borrow the maximum amount while planning to make only minimum payments. What you should do is plan to borrow the lowest amount possible for your situation and plan to make monthly payments that are a good deal higher than the minimum required. The sooner you can pay back a personal loan when you have bad credit, the better it will be.

Given that your bad credit might be caused by something as innocuous as an accidental misreporting of a bank finance charge, the first logical step is to review your credit report and fix everything you can -- if for no other reason than to expand your options for personal loans in the future. The credit reporting agencies often make mistakes, so a careful review of your report may turn up something you can easily fix. Tackling the other issues with your credit may take time and patience, but there is no quick fix for improving bad credit. Read more about personal loans for people with bad credit.