How To Borrow Money With A Bad Credit Score?

If you have a history of bad credit, it can be extremely difficult to secure funding from a traditional lender like a bank or credit union. However, the good news is that there are other alternative options that you can depend on, such as bad credit loans.

For those unfamiliar with this form of lending, bad credit loans are essentially a category of personal loans that are designed to specifically cater to individuals with a poor credit history or no credit.

They also work in the same fashion as personal loans in that individuals will borrow a lump sum and repay it in fixed monthly installments. For instance, borrowers can get a bad credit $5000 personal loan to help deal with unexpected financial emergencies such as car repairs, medical bills, and debt consolidation.

However, while most banks and credit unions typically have stringent credit score standards when approving loans, bad credit lenders will only use your credit score as a means of determining how much interest and fees you will need to pay. In other words, the lower your credit score, the higher your APR is likely to be, and vice versa.

What Types Of Bad Credit Loans Can I Get?

As mentioned before, bad credit loans are essentially a type of installment loan that must be repaid within a set period of time over regularly scheduled payments. In this regard, there are two main types of bad credit loans: unsecured and secured bad credit loans.

Unsecured loans

Most bad credit loans are unsecured, which means that you don’t need to put up any form of collateral to obtain funding. However, the downside of this is that lenders will often end up charging high interest rates and fees due to the increased level of risk. Also, the amount of money you can typically borrow with these loans tends to be limited.

According to Sarah Ross, the co-founder of CocoLoan, “Unsecured bad credit loans are a highly accessible form of lending, but it is important to only borrow these loans if you are confident in your ability to repay the loans on time. Otherwise, you risk falling into bad debt.”

Secured loans

Secured loans are essentially a form of lending that requires the borrower to put up some form of collateral, such as a house or a car. The benefit of these loans is that the security helps reduce the level of risk to the lender, which allows borrowers to access larger loan amounts at lower interest rates.

However, if you fail to make payments, the asset that you put up as security can be repossessed. Furthermore, if the lender decides to report the late payment to the major credit bureaus, it could negatively affect your credit score.

How To Apply For A Bad Credit Loan?

Step 1: Pre-qualify for bad credit loan

The first thing that you need to do is head over to a credit broker site like CocoLoan, which will allow you to access a wide network of online lenders. You will need to fill out a pre-qualification form with your personal and financial details to receive loan offers. Since prequalifying doesn’t typically involve a hard credit check, you can rest assured that your credit score will not be negatively impacted.

Step 2: Compare loan offers

Once you submit your form, you will be presented with multiple loan options to choose from. You will need to review the rates and terms being offered until you are able to find yourself the best possible deal. Once you identify the loan that is the best fit for you, you will need to read through the loan agreement thoroughly to ensure that you are completely satisfied with what the lender offers.

Step 3: Await Your Funds

Once you sign the loan agreement, the lender will start processing your funds, which should be available for you to use within 24 hours. However, keep in mind that once you receive the money, you will need to make repayments on time or risk being charged high late fees.

Can Bad Credit Loans Improve Your Credit Rating?

Depending on the type of loan and lender that you use, bad credit loans can help you improve your credit history. The key is to obtain an affordable loan and make sure that you borrow from a loan provider that typically reports on-time payments to the relevant credit bureaus.

However, you should remember that failure to pay your loan on time can result in the lender reporting you or even selling your debt to a collection agency. If this happens, your credit score could be significantly damaged, which could jeopardize your chances of securing any loans with favorable terms in the near future.

Alternative Tips On Improving Your Credit Score Quickly

If you want to improve your credit score and obtain more favorable loan rates and terms, there are other ways that you can use to help boost your credit score for the better. Here are three simple tips that you can use to help improve your credit score today.

#1. Avoid late payments

When it comes to your credit score, your payment history will often be one of the most important things that will influence how high or low it is. In other words, paying your bills late can significantly lower your score, which is why you should always make an effort to pay all your recurring bills on time.

A good rule of thumb that you can consider is to use auto-pay, which will ensure that you never miss a payment date. The more consistent you are with your regular payments, the stronger your credit score will become.

#2. Pay off pending debts

Another important factor that can affect your credit score is the number of pending debts that you have yet to repay. It is important to always keep your balances low, as owing a lot of money to creditors can negatively impact your credit rating.

In this respect, a viable strategy that you can consider is to consolidate any high-interest debt, which can not only improve your credit but also help you save money on interest in the long run.

#3. Avoid closing credit accounts

Closing any open credit accounts has the potential to lower your credit score, so you should always try to keep old accounts open. This is mainly because credit score algorithms tend to look favorably on accounts that have been open for a long time, have low balances, and also have high credit limits.


While bad credit can often be a tough financial roadblock to overcome, you can use credit broker services like CocoLoan to find legitimate and trustworthy lenders for bad credit online.

These loans allow you to circumvent the need to borrow from banks and credit unions, but keep in mind that you will need to deal with higher interest rates and shorter repayment periods. You will also need to remember that some bad credit lenders tend to charge extra costs like origination fees, prepayment fees, etc.

As such, you should always take your time to review your loan options until you find the lender that can offer you the best possible deal. And if you are unclear about anything, you must always be willing to ask questions to ensure that you don’t sign an unfavorable bad credit loan agreement.