How to Get a Loan With Really Bad Credit History

Getting a loan with a really bad credit history may be difficult. You may have to pay high interest rates or offer collateral, such as the title to a car that has been paid off. You may qualify only for loans for small amounts -- perhaps as low as several hundred dollars -- unless your collateral and other qualifications make you eligible for more. Having a stable address and steady income are also important as you apply for a loan with really bad credit history.

Instructions

1

Get a copy of your credit report and score to determine just how bad your credit is. Order the credit report for free from Annual Credit Report (see Resources). It's the only site officially authorized by the Federal Trade Commission to offer free credit reports under the Fair Credit Reporting Act. Follow instructions included with the credit report to order your credit score separately, for a fee. Credit scores range from 300 to 850 -- the higher the better, according to Privacy Rights Clearinghouse, a nonprofit consumer information company.

2

Improve your credit as much as possible by making payments to bring all open accounts current. If possible, resolve negative entries on your report, such as old credit card accounts that were sent to debt collectors. Make payments in full on these accounts, if you have the money. Your credit report will continue showing a really bad history, but your credit score could improve just enough to help you qualify for a loan.

3

Apply for a loan after about 60 days of completing the payoffs in Step 2. The wait allows time for your credit report to be updated following payments. Apply at a bank or credit union where you already have existing accounts, if possible. The established relationship may help you receive special consideration for a loan. Apply for an unsecured loan, which does not require collateral. If you are turned down, apply for a secured loan, which does require collateral. Secured installment loans are usually easy to qualify for because you must deposit cash that is held as collateral in a savings account.

4

Get a co-signer or borrow from family and friends if other options fall through. A co-signer with an excellent credit score -- above 720 -- could help you qualify for a loan. However, the co-signer will be fully responsible for the loan if you default.