Getting a loan with bad credit

It can be hard to get a loan if you have a bad credit score or if you are young and haven’t been able to build a credit score yet. This despite the fact that there are many legitimately good reasons to chose to borrow money even if you already have debt and a bad credit score. An example of one such reason is to borrow money to pay of high interest credit cards and thereby reduce your monthly credit cost.

bad credit loan

Many banks or credit institutes do not offer credit to debtors with a poor credit rating. This can make it feel close to impossible to get the loan you need. This is however not the case. There are a number of different methods that someone with a bad credit can use to borrow the money they need. On this page we will focus on some of the best methods you can use to get a loan despite your bad credit score.

Before we do this we are going to talk a little about the many types of loan you should try to avoid even if you have bad credit. – Especially if you have bad credit. –  These loans include payday loans, pawn loans,and bad credit car loans. On this page you can read more about different types of loans you should avoid. Generally it can however be said that the harder one type of loan is advertised the more you should avoid it. Especially if it is targeted towards people with bad credit. The best type of loan to choose is often a personal loan or an extended mortgage.


Mortgage loanIf you own a house you should start by investigating whether or not you have additional equity in the house that will  allow you to raise your mortgage. If the bank will allow you to borrow more money against your house you should choose to do this.  Adding an additional USD 5k to a USD 200k loan will only marginally affect your monthly payment. Secured loans will always be cheaper then unsecured loans.

If you do not have a house or if you already used all the equity in your house you will have to look for other types of credit.

Peer-to-peer lending

Peer-to-peer lending can be a good alternative for anyone with poor credit. Peer-to-peer lending companies often have more flexible rules than regular banks and can often offer loan to people with less stellar credit score. Peer-to-peer lenders are marketplaces where private individuals and companies can lend money to other individuals. The people who make the money available get the opportunity to earn a higher interest rate than they earn in regular banks and the borrower are able to borrow money they otherwise might not have been able to borrow. They also get the chance to borrow at lower rates than what most banks offer. It is up to individual investors to decide whether you deserve a loan or not. This make it possible to get a loan even if a bank might not give you a loan.

Credit Union

A option that is similar to peer-to-peer lending is to join a credit union and apply for a loan. A credit union is a nonprofit organizations that is owned by the members. Most credit unions are based around certain geographical areas or certain professions. Credit unions make cheap loans available to their members and can be a good option for someone who are unable to find a regular loan.

Friends & Family

Another option that we do not recommend is to borrow money from a friend or relative. To borrow money from a relative might help you get out of a hard situation but should only be considered if you are 100% certain that you can pay the loan back  on time. If not you risk destroying your relationship with the person who borrowed you the money and create a lot of tension between members of the family. Never borrow money form friends or family if you are not 100% sure you can pay it back.


An alternative to borrowing money from a friend or family member is to get a family member or friend to co-sign your loan. What this means is that they assume the responsibility to pay your debt if you do not. This allows you to borrow money using their credit score. This should also only be considered if you are 100% certain you can meet your obligation. Your friend or relative will not be happy if the bank calls them and tell them that they have to pay the loan because you haven’t meet your responsible.

Final words

If you have a poor credit it is very important that you only take on more debt if you really need it. If the debt will help you earn more money or if it will be used to pay down other debt with a higher interest rate. Never borrow money for consumption if you already have a poor credit rating. In this situation you should be focusing on improving your credit. Not on consumption.