How to Get a Long-Term Loan With Bad Credit

Bad credit not only affects the type and cost of loans, it can affect your housing and employment, as well. Long-term loans can help rebuild your credit, but it's important to improve your credit as much as possible prior to applying for financing. There are a few quick fixes, but many substantive changes can only take place with long-term fiscal discipline. Regardless, it is still possible to qualify for long-term loans with bad credit.

Instructions

1

Obtain an updated copy of your credit report at www.annualcreditreport.com. This site (which is mandated by the federal government) will give you a free copy of your report. You should, however, also pay for your credit score, otherwise known as a FICO score.

2

Look for ways to immediately improve your credit. This includes: bringing any past due accounts current, paying small collection balances, paying small liens, and contacting the credit bureaus to remove any old or inaccurate negative reports.

3

Research lenders. Use your credit score as a guide. Poor scores are below 600. If your score is very poor, you'll need to focus your search on finance companies (like Wells Fargo and CitiFinancial) and hard money lenders. Hard money lenders are private individuals who finance loans at extremely high interest rates.

4

Look for areas to strengthen your credit application. This includes highlighting a strong, lengthy employment or residence history. You could also point to your assets (boats, collectibles, investments). Last, you could pull together bank statements showing strong cash flow.

5

Apply to three to five lenders. Excessive applications will generate too many credit inquiries---which can further damage your credit score. Compare any and all loan offers side-by-side. You will likely be facing very high rates and fees. Think about whether a high-cost loan will benefit you financially.

6

Find a co-signer if you cannot qualify on your own, or if you cannot stomach the fees and rates offered. Co-signers can be friends or family members. Prepare to find potential applicants hesitant to sign on with you---it is just as high a risk for them.