Bad credit can hurt your ability to get a loan and make the loans you get more expensive from high interest and user fees. Still, you have to start rebuilding your credit someplace. A small loan is a good place to start. Keep some things in mind when looking for that small starter loan.
Go With Who You Know
A bank where you already have an account is the best place to start when looking for a loan with bad credit. The bank spent money attracting you as a customer and will go out of the way to keep you. Also, the bank has your account balance as collateral if you default. You won't get a huge loan, and you will probably pay high interest, but it's a start.
Credit Cards
Almost anybody can get a credit card. The question is really how much interest you're willing to pay. Although this isn't a traditional loan, cash advance privileges and credit card convenience checks will allow you to use the money for whatever purpose you need.
Secured Debt
Secured debt is a loan where you promise the lender can take something of yours if you default (like with a car loan or mortgage). With enough collateral, you should be able to find a loan. Pawn shops, title loan companies and paycheck loans are very expensive examples of where to get this kind of loan. You can also check with your bank about a secured line of credit on something valuable of yours.
Pay Early and Pay Often
The major drawback to credit with a bad credit score is interest. The kinds of loans available are often at very high rates, meaning you pay a lot for the money.
For example, some credit cards charge interest at 30 percent for poor credit risks. In just over three years, you will have paid twice the original value of the loan. When you take out this kind of loan, pay it off aggressively.
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