William Mwangi

Getting credit with a bad credit rating is a tall order, because it is a signal to lenders that there is a high risk of failing to repay. Nevertheless, there are ways to secure financing, mainly by seeking alternative sources of financing, and taking steps to improve your credit eligibility.

A poor credit score is one of the most financially crippling eventualities that can happen to you. Yet, many people walk passively into the trap by managing their debt poorly or as a result of unfortunate downturns in income that preempt their ability to keep in line with their debt repayments. Even if you are on a bad credit score, usually under 600, the situation is not hopeless and there are ways to secure loans.

Explore bad credit lenders

There are lenders that specialize in financing clients who have poor credit ratings. Unsurprisingly, these types of lenders attach very high premiums on their loans and care needs to be taken when engaging them. Many bad credit lenders tend to offer payday loans that disguise the extremely high interest rates. This is the first thing you should look out for. Ascertain that the loans offered are installment loans and that the attached interest rate is manageable. Bad credit lenders are rarely interested in your credit score. You should be wary about lenders who insist on performing a hard credit inquiry. A hard inquiry leaves a mark with the credit bureau and will potentially lower your credit further. Finally, look for a lender who is recognized by the Consumer Financial Protection Bureau. This is beneficial because it protects you from unsavory financiers, and also the loan repayment gets reported and goes towards improving your credit score.

Consider borrowing from friends and family

This is arguably the most pragmatic way to get a loan on a poor credit score. Since, friends and family do not check credit scores and are unlikely to charge interest, a loan from them can help you offset your financial problems and pay off your outstanding debt. One limitation of borrowing from friends and family is that they may not be as deep-pocketed as traditional lending institutions, which means that the amount you can realistically get is limited.

Get a cosigner or guarantor

If your own credit score prevents you from getting a loan, certain lenders allow you to bring in a cosigner, whose good credit rating will allow them to act as guarantee that the bank will recoup its money. In the event that you are unable to repay the loan, the cosigner is held liable for the loan and interest. This is therefore a very serious contract and consent of the highest order has to be given. Convincing a friend, spouse or family member to act as a cosigner is the first step to this strategy. Cosigned loans are also given at relatively lower interest rates.

Consider attaching an asset

Unsecured loans are generally a preserve of people with a good credit rating. Attaching an asset such as a house, vehicle or valuable may sway the lender to approve a loan despite a bad credit score. Secured loans generally come at lower interest rates, making it easier to repay and get back into the good books with lenders faster. There is an important caveat to this strategy however: although secured loans enable you to take up considerably higher loans, the ability to repay must be weighed intently. Even partial inability to meet installments can lead to repossession of the attached asset and your credit rating will be affected further.

Start repairing your credit score

A bad credit score is not a permanent thing but it requires consistent repayment effort on your part for lenders to see past your past sins. While this is not an instantaneous solution, you can begin by paying off outstanding credit card debt and more dated debt. It takes a substantial length of time for credit bureaus to delete non-repayment records, but concerted and consistent repayment shows the lender that you are intent on reclaiming your credit worthiness. Aside from this, credit bureaus often commit errors when calculating credit scores, negatively affecting your rating. It is possible to get a copy of your credit records from appraisers such as Equifax in order to ascertain that they are accurate. This way you can potentially rescue a few points on your credit rating and ease your way back into good credit.


1. https://www.bdc.ca/en/articles-tools/money-finance/get-financing/pages/find-financing-poor-credit.aspx
2. https://poorcredit.org/how-to-get-car-loans-with-poor-credit
3. https://www.debt.org/credit/loans/bad/
4. https://www.opploans.com/personal-loans/bad-credit-loans/
5. https://www.choicepersonalloans.com/wiseborrower/badcreditloaninfo.htm

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