How to Get a Loan with Bad Credit
Updated August 13, 2022

Personal Loans for Bad Credit: How to Get a Loan with 400, 500, or 600 Score

Personal Loans

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This article is about how to get a personal loan with bad credit such as a 400, 500, or under 600 credit score.

The financial world revolves around credit.

A credit score is important, and it is the first thing that credit institutions will look at when they are reviewing an application from a potential borrower.

Having a bad credit score is definitely a disadvantage.

You Can Get a Personal Loan With Bad Credit

But this does not mean that having a bad credit score automatically disqualifies somebody from gaining access to badly needed credit for houses, cars, holidays, or everyday expenses.

It is something of a myth that a good credit score is necessary in order to secure a loan.

It is just that you need to know where to look, and you need to be willing to accept terms and conditions that may be a little more rigid compared to loans obtained with a higher credit rating.

There are a wide variety of reputable vendors who can supply you with a credit loan even when your credit score is poor.

What is a Credit Score?

A credit score is a value assigned to an individual by a recognized third party institution.

The credit score is an indication of creditworthiness.

It is an assessment of the perceived likelihood of default, where the borrower will fail to pay back the lender.

U.S. vs. European Credit Scores

The USA and Europe differ in terms of credit ratings.

In Europe, a greater emphasis is placed on the current income of the applicant.

If the borrower is seen to have the funds to pay back the loan, then they are more likely to succeed in their application.

In the USA, it is more important to have a history of paying back loans than it is to have a regular income

So in the USA you are more likely to get a loan without any capital, provided you have a history of timely loan repayments.

FICO Score

The most common credit system in the USA is FICO, as it is most often used by larger credit institutions.

Poor credit is anything under 600, 600 to 700 is considered a good credit score, and anything above 700 is considered an excellent credit rating.

These are general approximations.

The credit score will firstly determine whether you can get approved for a financial product, and secondly what kind of interest rate you will receive on the financial product itself, if approved.

How Is Credit Score Calculated?

The FICO credit score is composed of a number of different components.

This includes your payment history (35%), debt burden (30%), credit history length (15%) credit type (10%), and credit searches (10%).

Payment History

Payment history is the single biggest issue in terms of credit score and makes up the largest slice.

Late payments will negatively reflect on your credit score.

You do not get any points for making payments on time, but you will be penalized for late payments.

It is important to understand that late payments on small amounts can be equally as damaging as late payments on large amounts, due to the way that credit scores are calculated.

Debt Burden

Debt burden is the next biggest factor, and this is often not taken in isolation.

For example, somebody with large amounts of debt but a proven track record of making payments will have a good debt burden.

But somebody with a large amount of debt and a bad track record will have a very bad debt burden.

Even a small amount of credit may not be extended to this person.

Credit Utilization

Credit utilization is another component in debt burden.

When an applicant has a lot of credit available but does not use the limit, it is taken as a positive indicator.

Length of Credit History

In terms of the length of credit history, the longer your credit history has been around the more accurate and reliable it is.

This is the average length of credit history across all accounts.

Type of Credit

The type of credit is the smallest component of your credit rating, along with credit searches.

But it is important for your credit rating.

A history of exposure to a variety of different financial products is always a positive sign that the applicant is good with money in general and used to repaying loans.

It demonstrates financial versatility, and lenders are more conservative with borrowers who have a narrow type of credit exposure.

How to Get a Personal Loan with Bad Credit

There are many ways to get a loan with a poor credit rating.

Additionally, there is actually a number of benefits in applying for loans with these type of credit agencies.

For one thing, the application is quick and free.

This can be contrasted to applications with larger institutions.

Sometimes applications can take months only to be rejected, and the level of required documentation is staggering.

This can be unacceptable when cash flow is needed urgently for day to day purchases or business operations.

Beware Unscrupulous Lenders

They are numerous organizations seeking to capitalize on those with poor credit ratings, which does happen and is a matter of concern.

Those with poor credit ratings are often preyed upon by untrustworthy lenders.

For this reason, it is highly important to select a reputable and established lender for bad credit.

The sector is one where applicants are more likely to get taken advantage of, if they do not work with some of the better companies with proven track records.

One of the premier credit agencies providing loans to customers with adverse credit ratings is

There is no cost to request a loan through, and they are an entity dedicated to responsible lending practices, unlike many other credit infrastructures.

Unlike many fly-by-night lenders that are here today and gone tomorrow, has been operating since 1998 and prides itself on being the go-to company for Americans with bad credit.

The application process is quick and easy, and all that is needed in terms of information upload is a bank account, email, and working phone number.

Privacy and security is taken seriously. does not require an invasive level of documentation unlike many of the larger credit institutions.

Loan Application Process

The loan application is submitted online, and a response can be generated within minutes of the application, as opposed to the typical hassle associated with more formal credit application processes.

The approved loan can be deposited into the checking account of the applicant within one business day, and loans of up to $5000 are available. Loans can be requested and approved at any time, and the company works with people of both good and bad credit.

There is a myth circulating that bad credit lenders are sharks that take higher levels than necessary off vulnerable people.

The truth of the matter is that bad credit lenders complete a vital function of any economy and provide sorely needed credit to people who would otherwise not get the financial support.

On top of this, they do it more quickly and less invasively than their large credit lending counterparts.

In many instances, the cost of not getting a loan is too expensive, such as emergencies or opportunity costs.

Dedicated to Providing Assistance

Agencies such as are one of few organizations genuinely dedicated to providing finance to those in need, and they believe that this finance can greatly help people achieve their goals and avoid disaster.

No matter how diligent, responsible or hardworking an individual may be, there are always disaster occasions where credit is urgently needed. is also interested in helping create financial solutions.

Debt is not a bad concept or design, it is a tool to be effectively used in order to create a better standard of living. has education tips and resources that can be used in order to achieve a superior style of life.

How to Get a Better Credit Score

It is easy to get a loan with a poor credit rating by using

And there is no real need to spend months or years trying to create a good credit rating, which can be an uphill battle to a degree.

However, there are a number of techniques that can be utilized in order to build up your credit score over time.

And it never hurts to have a good credit score where possible, so even if you have a bad credit score you should work on building it up.

Get Your Free Credit Score

When building up a good credit score, patience is key, and it takes time.

The first thing you need to do is obtain a copy of your credit score and see what it actually is.

You can get your credit score for free from Credit Sesame, and then you will have a starting point.

You can also check the list to ensure there are no incorrect down payments listed on your credit score, which can sometimes happen.

Pay on Time

The most obvious way to improve your credit score is to take out credit and repay it on time.

A history of paying back loans over time will reflect positively on your credit rating.

You can start with a basic credit card and pay back this credit.

You will have to start with the lowest type of available credit card with the worst terms and conditions.

But it is always necessary to start somewhere and work with what you have.

Gradually Get Better Credit Products

As your credit score gets better with time, you can then apply for a better credit card with better terms and conditions.

While many advise taking out a number of credit cards and using a small amount of each, this can actually backfire in some instances and is not advisable.

It is also not advisable to close unused credit cards as a means of raising credit score.

In terms of getting a better score, it is also better to pay off debt than to simply move it around.

Pay More Than the Minimum, If Possible

So avoid making minimum payments on loans and pay down debt where possible.

Taking out one loan and using one or two credit cards can be a good compromise.

Making payments on all of them can boost your credit score but you will still have to give the process time to work.

It is also worth nothing that paying off a collection amount will not remove it from your credit report for seven years.

If you open too many credit accounts, it can lower your average account age will adversely affect your credit information.

A lot of variables go into credit score calculation.

It is best to play it safe, get one credit card and one loan, and make payments on time.

Don’t Try to Game the System

Trying to game the system with tricks can often backfire.

When taking out credit, it is necessary to be thorough, diligent, and patient.

It is important to set up reminders of payment dates and to adhere to them.

Create a Budget

You will also need to budget so that you have the funds to pay back the loans.

It could be a good idea to make an excel spreadsheet that integrates budget and credit dates for various loans.

This is a skill that will be needed for life, not just until the loan can be repaid.

The ability to make repayments is an asset that will be constantly needed and can even build character.

How to Get a Loan with a Poor Credit Score: Summary

If you have a poor credit rating, then your best option is to avail of the services provided by

You will gain access to finance while simultaneously improving your credit score when you pay back this smaller loan.

Because the loans are small, you can take out a loan and repay it within 2-3 months, then perhaps take out another one if necessary.

This will boost your credit rating, though it may take a while to kick in.

There are options for people with bad credit and it is not the end of the world.

Loans are available for those who need it and Bad Credit Scores provide a hassle free, streamlined and essential service for those who have received a poor credit rating from agencies.

You can also learn how to handle money and build a better lifestyle by using the services available on the website.


Logan Allec, CPA

Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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