Having bad credit can make getting a bad credit personal loan difficult or worse.  Expensive!

But it doesn’t have to be.  With a little research, you can find the perfect bad credit personal loan for you!    We advise our clients to do their research, CALL or email prospective lenders (you get better responses with a call.) We provide them with a list of lenders we have worked with before, (click here for bad credit personal loan lenders) that we know won’t overcharge.

A lot of the online lenders you find here are safe to work with.  Some people leave negative reviews because they didn’t’ read the fine print before they applied online.  But if you are working with lenders you find on sites like Craigslist or in the back of a magazine.  You need to do your research!  Not all of them will be as reputable or closely regulated/reviewed as the online lenders.  But you can still find a good deal if you do the following when working with a local lender.

Be wary of lenders that are too good to be true!

Is it too good to be true?

Look at the ad you are responding to.  Are they promising everybody a loan?  Is the loan a large one? Be wary of lenders offering to lend large sums of money guaranteed with no credit check or security deposit required.

Let’s face it.  Some people are not creditworthy.  How can they stay in business if they are giving out these large loans to people that will probably not pay them back!

Upfront fees

When I first became a loan broker there was a company that wanted us to be brokers for them.  They did large commercial loans with very little down and no credit checks.  All deals were secured by the property being purchased,  BUT they required the client buy a special insurance product.  On paper, it sounded fine and the broker fees they paid made us raise our eyebrows.

But upon doing more research we found that the client had to pay a lot of upfront fees along with paying for this insurance bonds.  It might take 60-90 to “raise” the full amount the client needed.  And in the fine print, it said that they may not be able to raise the full amount they needed.  In the end, we decided that it was a bad move for our clients and we decided not to do business with them.

Most bad credit loans will have fees associated with them.  But don’t fall for some scam that wants you to pay a lot of fees upfront.

Doing your research

When dealing with ANY lender, good credit or bad.  It is very important to make sure you know what they are looking for in a borrower.

• What is the minimum credit score required?
• Do they have any income requirements?
• Do they need tax returns or will they accept bank statements as proof of income?

There are a few basic things you can do to make sure that you get the best loan possible when you are dealing with a bad credit lender.

Read the FAQ and eligibility requirements.  A lot of people will just apply because it says bad credit approved.  But did you know that many banks consider anything below a 650 to be problem credit?

When you read the FAQ or the eligibility requirements they will usually have a minimum credit score posted.   Also, you may find that the lender you are approaching works with people with VERY damaged credit.  While your credit is higher than what their average borrower has.  You don’t want this loan.  The rates and fees charged will be for people with TERRIBLE credit instead of slightly damaged.  In some cases, the lender will make adjustments for people with better credit, but most of them will put you in the same program as their other clients.  Or even when they slightly adjust their rate, it’s still higher than what you could have gotten if you had done your homework before applying.

• Pull all 3 credit reports with the score!  You want to know what your credit score is BEFORE you apply.
• You also want to make sure you meet their employment requirements.  Some banks want you to be on your current job at least 6 months.
• Look on sites like Yelp.com to learn more about these lenders.

Make a list of 5 lenders that you qualify for and meet your needs.

Pick up the phone and call prospective lenders

The next thing you should do is sit down and have a chat with each of the lenders to see if you have a good fit.  This is easy to do if you are local.  If you are dealing with an online lender, look and see if they have a phone number listed or a dedicated customer service department that can answer your questions via email.

Whether you contact them via email or phone you want to do the following:

• Show them you have done your research.  Talk to them about the loan that interests you, and ask them any questions that you couldn’t find the answer to on their website.   This may sound like a small thing.  But I’m always impressed when someone calls us about one of our business equipment leasing programs and they have actually read the requirements!  So many people call and ask questions that are answered on the site!
• Write down who you spoke with and what offers they made to you.
• List the pros cons, make sure they have disclosed all rates and fee information.When you are done you should be able to make a decision as to which lender to go with.