How to Find a Loan in Phoenix When You Have Bad Credit?

loan with bad credit

Taking out a loan can be a great idea if you need money in a hurry. That money can be used to pay for just about anything. The problem is that you need to qualify for the loan in the first place. That means you need decent credit.

There’s having a bad credit score, then there’s having one so bad it makes it practically impossible to get a loan. If you live in Phoenix, AZ and have a bad credit rating but still need a personal loan, the good news is that it could still be possible to get a loan.

What is Bad Credit?

If you know that you have bad credit and need a bad credit loan, then you likely know what your current credit score is. If you’ve ever wondered what is considered “bad credit”, then the answer is pretty simple. Any FICO credit score under 580 is considered to be poor credit. Having a credit score below that makes it more difficult to qualify for a personal loan, and it’s not hard to understand why.

Nearly two-thirds (60%) of people with bad credit scores become delinquent on their account. This credit score is an indicator of how reliable you are when it comes to repaying a loan. The better the score, the more confidence a lender has in you. The more confidence a lender has in you, the more likely they are to approve a loan.

Many lenders won’t even bother considering applications with credit scores of under 600. There are still many other lenders who are willing to offer bad credit loan options to people with credit scores of 550 – and even less. It’s a matter of finding them.

What to Do When You Need a Personal Loan with Bad Credit

You’ll likely find that you don’t have a lot of options when looking for loans in Phoenix with a bad credit score. You should expect to have to make a few trade-offs for the loan, such as having to pay higher interest rates or even putting up some collateral.

There are some things you can do to make life easier for yourself though;

1. Build up your Credit Score

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If you’ve got a low credit score – let’s say 550 – then you’re pretty close to getting a “fair” credit score of 580. You may want to take some time to build your credit back up before looking for a loan. You still won’t have great credit, and you’ll still be expected to pay higher interest rates, but you’ll have more success getting a loan. You’ll also have more options when it comes to lenders.

There’s no better time to start rebuilding your credit than right now. Get a secured credit card and do other things to improve your credit score. Check for errors on your credit reports too. There’s a chance that there could be a mistake that is negatively affecting your score. Of course, the best way to improve your credit score is to consistently make payments on time on any credit you do have.

2. Find Some Bad Credit Loan Options

If you absolutely need money in a hurry and don’t have time to build up your credit score, then try finding a bad credit loan provider. These personal loans are offered to people with even poor credit scores. Apply for pre-approval ahead of time to find out if you can qualify for a loan without a large amount of paperwork and credit checks beforehand.

What makes these leaders different is that they look at your current finances, rather than your entire credit history. They assess what you are making now compared to what you are spending and use that to assess your ability to repay. If they feel that you can repay your loan on time, then they’ll be more willing to approve it.

 3. Get a Title Loan

You’ll likely run into difficulty trying to get an unsecured loan with bad credit. You can apply for a secured loan instead. Title loans in Phoenix, AZ are secured against your vehicle’s title. Just remember that the asset is at risk if you default on the loan.

4. Get the Help of a Co-Signer

One way to get a loan with bad credit in Phoenix is to enlist the assistance of a co-signer. A co-signer is a third-party – such as a friend or family member – who has agreed that they will repay the loan should you default on it.

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Look for lenders that approve of co-signers – there are plenty out there – and choose someone who has a good credit standing of their own. Their own positive credit history helps to offset your bad credit history, which improves the chances of approval. As long as the lender has some reassurance that their money will be paid back no matter what, they are more likely to approve the loan.

Just make sure that you do your best to still pay back the loan. This doesn’t mean that you can default on the loan. Your co-signer has placed a lot of trust in you and you don’t want to burden them with your debts.

5. Ask Friends and Family for a Loan

There are many bad credit loan options to be considered, including just asking friends and family for a loan. Getting a personal loan directly from someone you know doesn’t involve a credit score check, so it doesn’t matter so much what your credit score is.

Make sure that you outline the terms of the loan and agree on them ahead of time. You are still making a big financial decision here, and the person will be expecting you to pay the money back. You wouldn’t want to destroy your relationship with someone over a loan after all.

Summary

Don’t despair if you need a loan in Phoenix and don’t have the best credit. It’s still entirely possible to take out a bad credit loan. Just make sure that you never borrow more than you can afford to repay. Don’t take what you know is a bad deal just because you need money fast. The worst thing you can do when you have bad credit is to get swindled by a loan shark. Talk to friends and family and only deal with licensed lenders.

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