If you have a credit score of 550 or below, then you’re probably already aware of just how tall an order it really is to find a loan. You’ve most likely faced a situation where a lender checked your credit score, saw how low it was, and pulled the rug out from under you right then and there. It can be incredibly frustrating when you desperately need money to fix your situation, but it seems like no one is willing to take a chance and extend you a personal loan for a credit score under 550.
The good news is that there are always options out there. The bad news is that they can be very difficult to find.
In this post, we’ll discuss the different ways that you can find a lender that will work with you despite your low score, the criteria you need to use to evaluate them, and give you some tips to make the process simpler.
How Can I Find a Lender Who Will Work Around my Low Credit Score?
If you’ve ever shopped for a loan before, you know just how overwhelming the experience can be. There are literally thousands of different lending agencies out there, each saying that they will offer you the best rates, with the highest loans limits, and the best terms to pay off your loan.
Problem: they reserve those great rates and terms for people with good credit scores.
Since your credit score is an indicator of how trustworthy you are, your ability to get a personal loan with a credit score of 550 will seem very limited. No matter how much money you make, a low credit score indicates that you don’t pay your bills on time or are consistently late, use credit to pay for things you really can’t afford and are generally irresponsible with your money. Even people with a credit score as high as 600 will encounter the same stigma.
So how can you find a lender who is willing to offer personal loans for credit scores under 500? In a word – volume.
When you’re trying to find a lender who will work with you, despite your credit score, the more offers you can compare, the better. You need to find and compare as many different offers as you can to find the best deal.
Be aware – when lenders offer to work with you, they will make a hard inquiry against your credit score. Hard inquiries, as opposed to soft inquiries, will cause your credit score to drop an additional 3 to 15 points. When you’re already dealing with a low credit score, you can’t afford for it to drop any further. Be upfront about your low credit score, and specify that you do not want a hard inquiry to be made. If the lender won’t offer you some example terms based on the score you provide, then move on to the next one.
This can be a long convoluted process, but to prevent you from being taken advantage of by predatory lenders, it has to be done.
What Should I Look for When I Compare Lenders?
While no two peoples’ circumstances are exactly alike, there are a few factors everyone always needs to check lenders for, whether you have an excellent credit score, or one as low as 450.
The Amount They Will Lend You
You always need to be aware of what types of limits the lender will impose on you. If you’re seeking a loan for $10,000, but the lender won’t extend you more than $2,000, that’s better than nothing, but still won’t do you much good.
The Interest Rate
This is the big one and something that you may simply have to settle for because of your low score. Generally speaking, lenders willing to work with people with low credit scores charge higher interest rates. They justify this by saying that they’re charging a higher premium to accept more risk. While it can be frustrating, it’s not unfair.
How Long You’ll Have to Repay the Loan
This is important because it will determine your minimum monthly payments. Even if you take out a loan as small as $5,000, if you have to repay it within a year, that will average about $416 a month. That’s a pretty hefty sum for most people.
How Quickly You will Get the Money
If you’re trying to take out a loan to prevent the loss of something, like your car or house, then speed is of the essence. A loan will do you no good if it will take three months for the money to come in, but your bill is due in a month.
While you can’t afford to skirt any of these factors, some may be more important to you than others. The problem comes from the wide variance between lenders. One lender will offer you a great rate, but won’t offer you much money. Another will offer you more than you need but expect it paid back quickly. It can be incredibly difficult to find a lender who balances them all.
How Can I Simplify the Search Process?
If this seems like a lot of hard work, that’s because it is. There’s nothing simple about either finding a good lender who will work with you, while also giving you fair terms on a loan. At least, not by doing it all on your own.
The team at Loans Now has made this process both quick and easy for you. We are a group of loan experts who specialize in finding great personal loans for credit scores under 500. We work with you to understand what your circumstances are, what you want to achieve with your loan, and then offer you great solutions.
Once we understand exactly what you’re looking for, we shop different lenders from our established network of great lending partners who will work with you, so you don’t have to. We’ll also never check your credit score ourselves – we give you the tools to check it yourself, which won’t drop your score, and you tell us what it is. Once we’ve found some great options, we help you compare each one, answer your questions, and offer advice, based on years of working in the financial sector, about which option we think is best for you.
We do all the work – you enjoy a great loan that meets your needs, without your low score getting in the way. Don’t put yourself through the strain of shopping hundreds of different lenders – reach out to us today!