How to Get a Loan Regardless of Credit Score & History

Secured loans provide a lower interest rate if you struggle with low credit scores.

Having bad credit doesn't mean you'll never get a loan again. However, financial institutions use risk-based lending. The higher the credit risk, the higher the interest rate. Loans with high interest rates will cost you more over the life of the loan. Secured loan products are less risky for lenders. This means your interest rate and monthly payments will be lower. As you make timely payments, your credit score will increase and lower interest rates will be more accessible.

Step 1

Apply for a secured loan. A secured loan uses an asset, such as a vehicle, to protect the lender from default. Secured loans have more lenient credit requirements and the interest rates are usually lower. Contact local banks, savings and loans and credit unions to inquire about secured loan options.

Step 2

Shop rates on personal loans. Another option is a personal loan. A personal loan isn't secured by an asset, which means the interest rate will be higher than a secured loan. This is a good option if you don't have an asset to secure a loan. Bank Rate (see Resources) allows you to compare interest rates online. Enter the credit rating to sort interest rates based on your situation.

Step 3

Talk with credit unions. If banks or savings and loans institutions are turning down your loan application, contact local credit unions. Credit unions typically make on-site lending decisions. A branch manager reviews all of your information to make a loan decision. Explain special circumstances, such as serious illness or job loss, to strengthen your case. Provide proof of recent changes, such as making timely payments for the past year on credit obligations.

Step 4

Compare loan fees. Application fees, annual maintenance fees and other charges can add up fast. Ask the lender for a fee disclosure sheet, which lists all fees in detail, before signing loan documents. Make a decision based on the lender with the lowest interest rate and fees.

Tip

Make timely payments for several months and talk with the lender about securing a lower interest rate. Timely payments increase your credit score. Boosting the score will persuade the lender to offer a more attractive interest rate.

Warning

Don’t forget to handle accounts in collections. Collection activity has a serious effect on your credit score. Contact the lender and ask to settle the account. For a lump-sum payment, creditors accept less than the total debt obligation amount.

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