High Risk Personal Loans

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Most people with a bad credit history have to get secured loans or credit cards in order to borrow money. While payday loans may be one of the few options for those with credit problems, they often cause more problems for credit-challenged borrowers than they solve. With enough work, it can be possible for someone with poor credit to get an unsecured loan.

First Step

Before approaching a bank, credit union, or finance company with an unsecured loan request, consider a few ideas first. Do you really need the loan? If you need a loan to pay basic bills, this is probably not going to get you approved. However, if you want the loan to pay for a kid’s braces, a special vacation, a trip, or cosmetic surgery then you are in better shape to seek a loan. Be certain you can pay back the transaction, as failure to do so will harm your credit rating even further.

Loan Letter

Consider writing a loan application letter to go with your package. This may help the lending officer see you beyond the credit score. Explain any bad credit history with good, truthful reasons that apply such as job loss or medical emergency. Identify how you plan to repay the loan and its purpose, also noting solid factors about your current bill paying history, finances, and length of time on the job.

Consider a Co-Signer

You may need to consider a co-signer to make the unsecured personal loan happen if your credit history is particularly bad and/or recent. Ask a trusted family member or friend with good income and credit to co-sign your application. However, keep in mind that if you do not pay the loan back on time, their credit rating will be hurt and also your personal relationship. Co-signers can be very helpful for those with bad credit seeking unsecured loans, so it is always worth trying to find one whenever possible.


Local or state-owned banks (as opposed to major financial institutions like Citibank or Bank of America), credit unions, and finance companies such as American General are usually better bets for bad credit unsecured personal loans. These institutions are more willing to work with a wider segment of the population to stay in business, and sometimes are more apt to look at the person more than the credit score.