Have a Low Credit Score? Here Are 4 Tips for Getting a Good Personal Loan

Need a bad-credit personal loan? Read this before applying.

When you apply for a personal loan, potential lenders check your credit score. If you have good credit, you stand a great chance of getting an affordable loan with a reasonable interest rate. But, what if your credit score is lower than you'd like it to be?

While a low credit score can make getting a low-interest personal loan more difficult, there are still borrowing options out there if you need access to funds for a big purchase or for important financial goals, such as debt consolidation. 

If you're hoping to get a good personal loan despite imperfect credit, these four tips can help make that happen. 

1. Consider a cosigner

Asking someone to cosign a loan for you can be one of the best and most effective ways to get an affordable personal loan even if your own credit score isn't great.

When someone cosigns, their financial credentials are considered along with yours by the lender determining the loan approval. If you get a cosigner with a good credit score, the lender will have less reason to fear that you'll default on the loan. As a result, you should get a much more competitive rate.

If you ask someone to cosign, be aware that they are taking on a lot of responsibility on your behalf. If you pay late, you could damage your cosigner's credit. And if you don't pay at all, the lender could try to collect from the cosigner. So, only take this step if you are 100% certain you will be able to pay your loan on time and in full.

2. Shop around

Whether you get a cosigner or try to apply on your own, you'll want to shop around and compare loan offers from multiple lenders. This is especially important if you're applying only with your own financial credentials, though. That's because some lenders penalize low credit scores more than others do.

Since there can be a lot of variation in the different rates lenders charge, you should get quotes from a minimum of three and ideally more personal loan providers. This can include banks, credit unions, and online lenders.

By finding out what each different lender will offer, you can make sure you get the best terms possible given your financial situation. 

3. Look for lenders that offer loans to people with imperfect credit

There are some lenders that specifically cater to people who don't have perfect credit. Working with one of these lenders can be better because you're more likely to get approved than if you applied with a different loan provider with stricter requirements. 

4. Read the fine print 

Finally, with any loan you are considering taking out, you absolutely need to read the fine print. And this is especially important if you don't have perfect credit, as some unscrupulous lenders try to prey on people who are worried about not getting approved for financing they need.

When you consider whether a loan is right for you, look at the total costs of repayment over time, your monthly payment, any fees you'll be charged, and whether your payments can change over time. By making sure you understand these key details, you can avoid accidentally applying for a loan that comes with surprise costs. 

Following these four tips can hopefully help you borrow successfully. Remember, don't borrow more money than you need and be sure that taking out the loan is a good financial move in the long run.