Because of the lousy economy and large unemployment rate, many people are finding that they have a bad credit score for the first time in their life. On the flip side, they are also in need of money, and a personal loan for $5,000 would really help out towards getting their bills paid. There is a myth out there that anyone with bad credit is automatically disqualified from taking a loan. However, that is simply not the case.
What Do You Mean by Bad Credit?
Anyone whose credit score is below 600 in the Fair Isaac Corp.'s rating system (also called a FICO score) is considered a risky borrower with bad credit. Personal loans are generally harder to get when you fall into this category for a few reasons.
First, your poor credit may reveal that you are stretched beyond your limits financially and therefore would be unable to make the monthly payments on one more loan. Second, poor credit may show that you were not responsible in repaying loans of the past. A chronic history of late payments and/or defaults on previous loans will make a lender question your reliability as a borrower.
Finding a $5,000 Loan with Bad Credit
There are still lenders who can work with you, however, despite your bad credit. Personal loans are given for a number of reasons and with a number of repayment terms that can be designed to fit your particular financial needs.
The first stop you should make when searching for a personal loan is to your local, personal bank. Though they will not be likely to loan to you given your poor credit score, personal loans are given by banks every day, so they may be able to offer you tips or credit counseling free of charge.
The next place to look is online. Private lenders who work on the internet generally specialize in lending to high-risk borrowers such as those with poor credit. By speaking to several, reputable and honest private lenders, you are likely to find one or two who can work with you and get you the $5,000 you need.
Compare Offers to Get the Best Deal
Like any major purchase, loan shopping should be based on comparison. Once you identify several online lenders who can help you get a $5,000 loan with bad credit, you will need to get detailed quotes from all of them. Then, you should sit down with someone else, a trusted friend or family member is a good choice, and assess each deal that is offered. Compare the monthly payments, interest rates, fees and surcharges, as well as any other deals or discounts offered.
By comparison shopping for your personal loan, you will be sure to find the best option for your bad credit.
Loans for $5,000
The final element that you will need to assess is the total amount of money offered. If you are looking for $5,000, you may not be able to get it all from one lender. Look at several different options which include payday loans (or cash advance loans) as well as unsecured personal loans. Perhaps by combining offers you can get all of the money you need.
One word of caution, however: if you do combine the offers you receive, make sure that all of the payments fit into your monthly budget. Otherwise, you may end up defaulting on your personal loans and making your bad credit worse.