How to Get a Personal Loan with Bad Credit or No Credit

For unexpected expenses, unwieldy debt, and big investments, many people turn to banks for capital. There’s an old saying that banks only lend to those who don’t need it; a saying that rings true to people searching for loans with bad or no credit. Luckily, credit unions are more flexible than traditional banks and are here to help people reach financial security. If you have a poor credit history, you may still be eligible for a personal loan through T&I Credit Union.

How Credit Score Affects Your Loan Options

Your credit score is one of the most important factors financial institutions review when considering your loan application. If you have poor credit, lenders will be willing to offer you smaller amounts because you are deemed a greater risk of not paying back your loan. Lenders typically charge higher APRs, or interest rates on your monthly payments, to offset this risk.

What Makes a Bad Credit Score

Lenders usually consider good credit to be a score between 700 and 850, fair credit from 620 to 700, and low or poor credit anything below 620. Having a high debt to income ratio, defaulting on loans, or making untimely monthly payments lowers your credit score.

Even being new to the banking market can take a hit on your credit score, because lenders view people who haven’t had the chance to prove their credit-worthiness at a higher risk of defaulting on their loans.

How to Find Your Credit Score

Your credit score is a number between 300 and 850 that lenders look at to estimate your credibility as a borrower. It is calculated with your outstanding balances, length of credit history, applications for new credit accounts, and types of credit accounts, including auto loans and mortgages.

You can access your credit score for free, often through your credit card company. At any given time, you have several different credit scores based on your credit reports from the three large credit reporting agencies.

You can request a free credit report once a year from each of these credit reporting agencies (Equifax, Experian, and TransUnion). It is important to check your credit report and verify its accuracy so your credit score is correct.

How to Improve Your Credit Score

A poor credit score can make it more difficult to secure loans, rental properties, and even jobs. If your credit score is less than excellent, you can benefit from improving your credit score by the following devices.

Build Credit

If you’re new to the credit scene, you won’t have a strong credit history. Consider applying for a credit card with T&I Credit Union and making timely payments to prove your dependability.

Pay Outstanding Debts

Decrease your debt to income ratio by lowering your debt. Pay back your credit card debt and keep on top of your monthly payments for outstanding loans. It also helps to reduce the balance on your credit cards to less than 30% of the limit.

Verify Your Credit Report

Review your credit report and dispute errors to ensure your credit score isn’t artificially low. Credit reports also provide key insights into what is lowering your credit score and how to improve.

Limit Loan Applications

When you apply for a loan, you’ll have to authorize a hard credit inquiry, which temporarily lowers your credit score. Do your research first and only apply for loans you are serious about. At T&I Credit Union, you can ask for a soft credit inquiry to determine the rates and terms of a loan before fully applying. A soft credit inquiry doesn’t affect your credit score.

Other Ways to Increase Your Credit-Worthiness

Building your credit score takes time, and if you need funds soon, improving your credit score for more favorable APRs might not be an option. If you have a poor credit score, you can increase your credit-worthiness with a co-signer or by gathering proof of your reliability.

Asking someone with excellent credit to co-sign a loan can help you get approved and qualify for a lower APR. You’ll essentially get to piggy-back on your co-signer’s excellent credit because you’ll both be guarantors of the debt. If you default on the loan, your co-signer will be liable to repay it, which means appealing to a relative or friend to co-sign a loan is a big request.

If you don’t have a credit history, or you believe your credit looks worse on paper than it really is, you can convince the lender of your ability to pay back the loan. A good way to go about this is by asking for an in-person interview and gathering documents that demonstrate your reliability. You’ll want to show proof of employment and your salary, job history, assets, and bank statements showing your savings accounts and CDs.

Even if your credit score is poor, you can build a case for yourself to convince the lender you’re a good risk to take on. With this method, you’ll have to repay small loans before you’ll be trusted with larger ones. On the bright side, you’ll be improving your credit score at the same time.

Types of Personal Loans

At T&I Credit Union, we offer a variety of personal loans that can be attainable with poor or no credit and may benefit your credit reports. Secured loans decrease your risk to the lender, but even unsecured personal loans like credit cards are accessible to people with poor credit.

Credit Card

A credit card is a great way to build rapport with credit companies. Punctual payments also ensure that you don’t pay interest on your purchases. With a T&I Credit Union credit card, you can earn one point in rewards for every dollar spent.

Debt Consolidation

Struggling to keep on top of debt payments is a leading cause of a poor credit score. To ease this problem, consider debt consolidation, or merging multiple debts into one. You can move debt away from lenders with high-interest rates to save money while simplifying the payment process.

Life Loans

A life loan can help if you need some extra funds to finance a wedding or vacation. We offer up to $2,500 for vacations and $10,000 for weddings.

Share Secured Loans

If you have a savings account, you’ll qualify for a share secured loan of the same value. We’ll use your savings account as security for a loan to provide you with funds now while improving your credit score when you make timely payments.

Using savings as collateral decreases your credit risk so you can borrow with a share secured loan which prevents you from withdrawing your savings until you have repaid the loan.

Signature Loans

Signature Loans can help with unexpected expenses like medical emergencies, car repairs, and home improvement projects. As these are unsecured loans, your credit score will be weighted with your other finances to determine your APR.

Student Loans

If you’re a student, you probably don’t have a particularly long or robust credit history. Luckily T&I Credit Union makes it easier for you to invest in your own human capital with student loans through our partnered company, Student Choice. Just continue making satisfactory progress toward a degree to retain your loan, and enjoy the peace of mind to focus on your studies.

Pitfalls to Look Out For

Even with poor credit, you’ll likely find potential lenders ready to compete for your business. While this can provide an option to secure needed funds, be wary of negative unforeseen consequences.


Look out for the warning signs of a scam. If a potential lender guarantees you’ll be approved without running a credit check and can’t be found on the Better Business Bureau Ranking, don’t be in a hurry to hand over your Social Security Number.

Debt Traps

Beware of personal loans marketed as short-term debt relief. Personal loans with exorbitant interest rates can leave you with more debt than you had originally. Payday loans can fall into this category by charging as much as a 30% interest rate and requiring payments from every paycheck you make.

Borrowing from Relatives

Relatives and friends will often have more relaxed loan approval standards and charge lower interest rates, but appealing to relatives for money can have some serious consequences on your relationship. A default or misinterpretation resulting from a loan between relatives may end up being more costly than a tanking credit score.

Additional Benefits of T&I Credit Union

Taking out a loan with T&I Credit Union can do more than just provide the finances you need now by allowing you to borrow against your future. When you become a member, you’ll have access to additional money-saving tips and member services to help you improve your financial security.

As a T&I Credit Union member, you’ll have access to products and services that online lenders can’t compete with. We offer online banking, credit score analysis, and a financial tracker so you can make the most of your money.

Why a Personal Loan?

You might use a T&I Credit Union personal loan to help set your finances straight. Debt consolidation can be a useful tool to lower the rates you pay on your debts and may make it easier to pay your principal balance.

If you’re looking to build or improve your credit score, applying for a credit card or share secured loan is a good option. However, this method can backfire if you aren’t careful. Keep your debts manageable so you don’t end up damaging your credit score by missing payments.

If you don’t have time to improve your credit score, but you need to pay for unexpected expenses, a signature loan may be a viable option. Keep in mind that with a poor credit score your APR will be high. Luckily, credit unions charge a maximum interest rate of 18%, so this is still a preferred alternative to payday loans.

How to Get Started

You can apply online for a T&I Credit Union personal loan in about 20 minutes and typically hear back from us within one business day.

For an estimation of your monthly payments for a personal loan, try out our loan calculator. We can also perform a soft check on your credit score for a more accurate idea.

Managing Your Personal Loan

Becoming a T&I Credit Union member is an excellent start on a path to financial stability. It’s a good idea to set up autopay with your personal loan to automatically make timely payments. This can benefit your credit score and give you peace of mind.

It’s also important to reassess your monthly budget to account for payments on a personal loan every month. If an unexpected expense or loss of income arises, borrowers from T&I Union can skip a payment once a year – just be sure to submit the paperwork before the payment is due.

The Take-home Message

Personal loans are harder to come by and more expensive for people with bad or no credit. The first response to this problem is to improve your credit score. If you need emergency funds immediately, you can still get approved for a personal loan by proving your credit-worthiness in ways besides credit score.

To begin the journey of improving your credit score, look into the personal loans and member benefits offered by T&I Credit Union. We’ll provide you with unrivaled support as you navigate your current financial situation. For more assistance or information, call us at (800) 338-3908.

About Charlie Anderson

Charlie Anderson studied Economics as an undergrad. She has worked as an educator and writer and enjoys painting pet portraits in her free time.

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