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Tips for Loan Approval Under a Bad Credit Score

Poor or low credit scores are bad news as it hinders us from getting essential loans to cover our expenses. When that happens, others think it’s a game over. But don’t give up just yet. It’s not the end of your future loans when that happens. While it can be difficult to get an approved loan with low credit scores, there is always a fallback option. There are loans you can avail even if you have a less than desirable credit score. The only drawback with such options is that they can be tricky to apply and have high rejection rates. Fortunately, there are things you can do to increase your likelihood of getting approved. 

Here are five tips for getting future personal installment loans with bad credit score.

Understanding your Credit Rating

The first step is to do a history check on your recent and old debts. Is there a payment that you missed? Have you recently got a big loan?  Those things are essential for you to understand the events that happened before getting into this situation. Doing so will help you get a solid plan in recovering your losses. 

Take note that these credit and financial checks may be complicated, but there are always ways to help you. The easiest way to do that is to visit your local bank and seek assistance in reading your credit checks. This may not guarantee loan approval, but this is a head start in weighing possible options with minimal risk.  

Setting up a Home Equity Loan as an Alternative

If you own a house with enough equity, you might be eligible for a home equity loan. Home equity loans are low-interest, tax-deductible loans you can avail regardless of your credit score. And there are two variations for your preference and flexibility, Home Equity loan and Home Equity Lines of Credit or HELOC for short.

A home equity loan is a one-time loan agreement; a large amount of money is to be given to the qualified homeowner and repaid with fixed amounts per month. Each payment deducts the loan balance as well as cover the interest costs as per contract. 

Home Equity Lines of Credit or HELOC is like a credit line in its nature. You can get short, approved loans as needed, and you can also pay in smaller amounts for a couple of years. HELOCs are more flexible, but you are also susceptible to interest fluctuations, so there may be different monthly payments over time. 

But be warned this is a low-cost, high-risk option. In getting this loan, you agree to use your house as collateral if you’re unable to pay your dues on time. The lending company or bank reserves the right to take your home. This should be used as a last resort to keep your finances afloat should the need arises

Getting a Co-signer 

If you’re in a more profound financial crisis and your chances of loan approval are low, then getting a co-signer might be an option for you. A co-signer is a person who has an excellent credit score signing a loan with you; this means that the co-signer is also responsible for your investment. 

Be reminded that if you don’t repay the debt in time as per contract, the lending company or bank will seek for the co-signer for the full amount. Consider the fact that the payment history for a co-signer is obtained on your credit reports, which can be disadvantageous for the co-signers credit if you make late payments.

Getting Loans from Online Lending Websites

Applying for loans from online lending websites is a viable option for quick approval. These online lenders are efficient with regards to transactions and competitive for its charging rates, and since everything can be done at home, it gives you the ease of access and comfort.
With regards to bad credit, online lenders are more likely to approve lower credit scores and use alternative information to assess your creditworthiness, examples are but not limited to monthly utility payments and loan history. 

Lastly, most online loans are unsecured; you don’t get to provide collateral to get approved. This is safer than placing your assets at risk. If unable to pay on time, your credit scores would only drop.

Lending from your Friends and Family

Nothing beats the old family trust and assistance, set up an agreement, either verbal or under legal contract, which you can get a format online. Both parties can negotiate the terms of payment, interest rates (If there are any), and collaterals in a flexible manner. 

Depending on your relationship with the lender, you could set up a beneficial loan in favor of you. Bear in mind this is a personal loan from someone close to you, and not paying on time can create problems.


When it comes to debt and finances, it is best to do things smartly and take time to make planned decisions. The examples stated above are used to keep you financially afloat despite your poor credit score. It’s still best to stay organized with your payments, pay them on time, and avoid or correct late payments as soon as possible. 

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