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How to Get a Personal Loan With a Subpar Credit Score

[Apr 17, 2009.]

 

In this economy, obtaining an unsecured personal loan can be challenging regardless of credit score. However, those who do rank low on the credit totem pole are measuring more limited options.

For an individual whose credit score is between 580 and 630, securing a personal loan can be especially difficult. But that doesn't mean it's impossible.

Minimum Requirements For Securing a Personal Loan

More often than not, in order to get a personal loan from the majority of lenders, your credit score must be above 580.  Another common prerequisite is to have at least one thousand dollars per month in verifiable, consistent income.  Residency in the United States is also usually required.

Potential borrowers who hold a checking account with an upstanding bank are at an added advantage in seeking an unsecured personal loan.

Borrowers who meet these minimum requirements can obtain an unsecured personal loan, even with subpar credit. Borrowers who don't meet these requirements may want to pursue other options, such as:

If an Unsecured Personal Loan Is Unavailable, Consider an Auto Equity Loan

If a suitable unsecured personal loan cannot be found, an auto equity loan may offer another option for borrowers with problematic credit.

With an auto equity loan, the borrower puts his or her vehicle up as collateral to secure the loan.  The borrower continues to drive and own the vehicle, so long as the loan is paid.

Get a Co-Signer With Good Credit

The other option is to get a co-signer who has good credit. Interest rates and terms on unsecured loans are much better when a good credit borrower is involved. Sums available for borrowing also tend to be higher with co-signed personal loans.

Prospective borrowers can compare rates and terms for unsecured personal loans applied for on their own versus with a co-signer at sites like Credit.com, which offers free quotes.

Research All Options Before Signing on the Dotted Line

Research unsecured personal loan options from a variety of sources, not just one. Shopping around is the best way to get a good deal on an unsecured personal loan. Most important of all, once a loan has been secured, repay it according to the terms agreed upon. That way, this personal loan leads to an improved credit score, and makes other loans in the future easier to obtain.

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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