Is It Possible to Get a Personal Loan With Bad Credit?
It can feel stressful to know that a lender will be looking at your credit score—especially when your financial future is on the line. But you should know that hardly anyone has perfect credit.
In fact, the most recent statistics published by FICO show that only 1.6% of people in the United States have perfect credit. And, for the 98.4% of people who don’t have perfect credit? Studies have shown that, when asked to guess their credit score, most people think it’s worse than it really is.
If you do have some financial problems in your past, don’t give up yet. Lenders generally place more importance on your recent credit history than on things that happened in the distant past. So, it is possible to get a personal loan even if you have “bad” or less-than-perfect credit.
How Getting a Personal Loan Affects Your Credit Score
Getting a personal loan can also boost your credit score. Building a history of regular payments, and then completely paying off a loan will generally increase your credit score.
Of course, you want to make sure that you can afford to pay on the loan without missing payments. If you have too much debt compared to your income or if you miss payments, a personal loan can have a negative effect on your credit score too.
Sometimes people even take out small personal loans to help increase their scores. If you don’t have much of a credit history, taking out a personal loan and paying it off is a great way to boost your credit score.
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