Applying For a Loan When Your Credit is Less Than Perfect

Dealing with less than perfect credit makes many situations tough. Think about buying a new home or car or trying to get lower interest rate on a credit card—each of these scenarios are made more difficult when you’re dealing with bad credit. Being a borrower with bad credit is not an ideal situation, but it’s also not an impossible one. If you do your homework, you can find a lending product that’s right for you and will simultaneously help you improve your credit profile. If you’re a borrower with credit issues, here’s what you should consider when looking for a loan.

Find a loan that meets your unique needs

Not all lenders are created equally. Some will try to take advantage of your situation, making it easier for you to fail to pay the loan back and worsen your credit situation. Don’t fall for it! Look for a loan that wants you to succeed! The best loans for your situation won’t have fees—no origination fee, no application fee, no prepayment fee. Sometimes loans with a low interest rate are too good to be true. They aren’t showing you the whole picture. Instead, use a loan’s APR as a comparison tool. This gives you a truer representation of what you’re truly paying for.

Know what to avoid

In this situation, not all loans will be beneficial to you. Issues range from being denied a loan to getting loan product that does more harm than good. Stay away from anything you’ll never be able to pay back. If you can’t afford the loan, steer clear! A good loan will help you turn your bad credit into good credit. If you get one you can’t afford, or it has outrageous fees, it will only make everything worse.

Improving your credit health to get your loan

Improving your financial health will improve your pool of options. Start by getting a better look at your financial profile. This means checking your credit score and reviewing your credit report. Doing this will identify areas where there is room for improvement.

Be strategic about applications you complete. It may be tempting to apply for many different loans to see what sticks, but this will do further damage. Every time you apply it will do a hard pull on your credit report, which might cause your score to drop a few points. Instead. Instead, do your research first. Apply only for what you truly need, and only take out what you can pay back. Then, make every payment on time. A history of on time payments can improve your score.

If you’re also dealing with debt during this time, now is not the time to neglect it. Focus on getting bad debts off your credit report. This means you’ll need to plan to pay off your creditors on your own or through debt relief services.

Where to look for a loan

A personal loan from an online lender can be a good option in this situation. We personally recommend the Reload Loan—a fast option that gives you the flexibility you need without fees you don’t need. However, don’t forget about your local credit union. Your local credit union will likely understand your situation and want to see you succeed. They can help you find an option that will do exactly that.


When it comes to looking for a loan with bad credit, remember to always do your homework, watch out for traps and stay away from anything you can’t afford. Also, never be afraid to ask for help. New Credit America is happy to provide guidance and identify appropriate solutions for your situation. Just call 877-373-2330 to speak to one of our experts today.

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