As you might suspect, it's much more difficult to take out a personal loan if you have poor credit. Many lenders can be quick to turn you away if they don't like your credit score or what's in your credit report.
But it's not hopeless! Here are four steps for landing a personal loan with your less-than-perfect credit.
1. Get your credit reports and scores
First, you need to find out: Do you really have bad credit? Remember that negative reports on your credit report fall off eventually, so you might have aged out of your credit hiccups. It’s also important to make sure you don’t have any errors on your credit report that are dragging down your score.
See what the major credit reporting agencies — Equifax, TransUnion and Experian — have on you. Obtain free credit reports from the big three by going to AnnualCreditReport.com. Every year, you're entitled to one free copy from each.
The reports won't include credit scores. You may need to pay a fee for those, although there are a few ways to find your credit score for free online.
Many credit cards will also provide you with a credit score as a perk.
2. Understand your reports and scores
Review your credit reports and look for the sorts of things that concern lenders, such as any late payments you made within the past two years, and whether you're using too much of your available credit.
Credit scores range from 300 to 850, and a score below 700 is considered fair or poor. If you have a credit score under 600, you can expect a very high interest rate — if you can get a personal loan at all.
3. Visit the nearest credit union
If you have a weak score, your options may be limited. However, your local credit union may be an excellent source for nontraditional credit loans, because those institutions tend to have more flexible lending programs.
If you're turned down, you can ask why you were rejected and what changes you need to make in your credit profile so you can try again, and maybe get approved next time.
4. Look into bad-credit personal loans
If a credit union does not have a program for you, then check out online personal loan options for bad credit. For smaller loans (up to $4000) you can check out OppLoan, a personal loan company that specializes in nonprime borrowers.
For bigger amounts, check out LendingPoint, Lending Club, OneMain and Mariner Finance.
The interest rates for these loans will be high, so brace yourself for higher payments. The loans also tend to come with high fees.
And while you will mostly find unsecured loans, meaning they require no collateral, some of these lenders do offer secured loan products, where you'll need to put up collateral, such as real estate or your car.
Some of these programs call for co-signers. But if you are going to need a co-signer, you might as well consider a more conventional loan product, such becoming an authorized user on a family member's credit card.