About Bad Credit Personal Loans Banks

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It is possible to get personal loans from banks when you have bad credit. In fact, there are financial institutions that specifically target customers with bad credit. Because these banks are willing to assume the financial risk of loaning money to those with bad credit, they can charge loan fees and much higher interest rates, creating the potential for greater profits. Borrowers with bad credit may lack other choices in banks when seeking personal loans until they can improve their credit.


Banks consider individuals with credit scores below 620 to have poor or bad credit. Banks find out your credit score from at least one of three privately held credit reporting agencies. The credit reporting agencies are Equifax, TransUnion and Experian. Most banks offering to do business with individuals with bad credit are internet-based or local businesses that offer payday advances. Some payday advances are more like personal loans because they are renewable each payday until the borrower is able to pay in full. Of course, fees apply with each renewal.


The banks offering to loan money to those with bad credit do have some basic lending requirements that individuals must meet in order to apply. The banks require the borrower to be at least 18 years old and a legal resident with a minimum verifiable income of at least $800, although some require $1,000. Banks may require the borrower to have no outstanding payday loans or an active checking account.


Most banks seem willing to offer unsecured personal loans of up to $1,500 to individuals with bad credit. Common offers are loans of $500 without a credit check deposited into your checking account in 24 to 48 hours. Secured loan amounts are a percentage of the value of the collateral.


High risk lending banks may charge loan origination fees to applicants as well as high interest rates that may be three times the average interest rates or more. If a borrower cannot pay on the due date these banks may offer to delay payments with extension fees. The terms of the loan may include prepayment penalties; these are additional fees for paying off the balance early, so read the fine print. Lenders may also offer loan insurance for an additional fee. If you are considering this option, be sure you fully understand the costs and exclusions. If the banks fees and rates are tier-based, then a loan for $2,000 may have a significantly lower interest rate than a loan for $1,999, so be sure to ask.


Once you begin searching for personal loans you may be approached by fake lenders, phony debt counselors or scam artists who may even be using real names of loan companies. Learn about the latest advance fee loan scams and identity phishers before giving anyone your personal information such as your social security number or bank information.

About the Author

Julia Fuller began her professional writing career eight years ago covering special-needs adoption. She holds a bachelor's degree in accounting from Marywood College, is co-owner of GJF Rental Properties as well as a livestock and grain crop farm. She worked for the United States Postal Service and a national income tax service.

Photo Credits

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