Can I Get an Installment Loan for a Bad Credit Score?

Have a bad credit score? You're not alone. Nearly 108 million Americans have a low or no credit score. Unfortunately, a bad credit score can make it more difficult to save money when it comes to getting good rates on car insurance, credit cards, a mortgage, and lots of other areas where credit scores are taken into account. 

In addition, most people don't have enough money to purchase things like cars and houses up front, making it so taking out a mortgage or getting a car loan is a necessity. 

The good news is, a good credit score isn't always needed to qualify for installment loans with bad credit. Installment loans allow borrowers to receive a set amount of money all at one time. Repayment for installment loans is done over a set amount of time and at a set amount in regular intervals, typically monthly. 

To determine whether you'll qualify for personal installment loans for bad credit, some lenders will look at your current debt and your available income instead of just your credit score. That's why installment loans are generally considered one of the best loan options for borrowers with bad credit scores.

What Is Considered Bad Credit?

Bad credit is what a creditor has when they possess a history of inconsistent and/or late payments for loan and credit accounts that they have. A bad credit score range is typically about 580 and below. 

Your credit score is a numerical value that ranges from 300–850 and is based on factors such as any debt you already have, the length of your credit history, and the history of your payments. This score reflects how well you manage your debt and whether you pay your bills on time. For example: If you pay your bills by their due dates, you will earn a higher score. If you are late to your bills or don't pay them at all, you will accumulate a lower score.

FICO credit scores are broken down as follows: 

• 781 to 850 — Exceptional 
• 661 to 780 — Good
• 601 to 660 — Fair
• 500-600 — Poor 
• 300 to 499 — Very poor  
  

Lenders of all types will pull your credit score as a part of your application process. They will be wary of lending you money if they see a low score because that means you are a risky investment on their part. A higher credit score means you are less of a risk and will most likely pay them back, and, thus, be approved for a new loan with favorable terms more easily. 

A low credit score doesn't necessarily mean you won't be able to get a loan, it just means your loan may come with high interest rates or other penalties for late payments you wouldn't receive with a higher credit score. That's why it's good to shop around to find the best installment loans for bad credit. Some ideas to improve your credit can be found here.

Comparing Installment Loans for Bad Credit

When looking for an installment loan for bad credit, it's important to compare your options. You don't have to take the first installment loan you're approved for.

Consider the following factors when comparing installment loans: 

• Rates — What is the rate you're being offered for your installment loan for bad credit? Note that the higher the interest rate, the more the loan will cost you over the timespan of the loan. 
• Terms — If you spread the length of your loan term out longer, then you'll have lower payments every month. However, longer loan terms also means you'll be paying more in interest in the long-term. 
• Lender reliability — Just because installment loans for bad credit look good on paper, it doesn't mean they're from a reliable lender. Do some research into the lender offering you a loan. What do any customer reviews say? How long have they been around? A little research could potentially save you a lot of money. 
• Fees — Personal installment loans for bad credit won't come without some associated fees. Oftentimes, lenders attach fees to installment loans to protect themselves in the off chance you don't make your payments on time. Make sure you know up front what fees you may be charged for missing or late payments. 

Common Features of Bad Credit Installment Loans

Installment loans for bad credit work the same installment loan do for good or great credit. They all have:

• A set loan amount that you will receive funds in the amount of. 
• A schedule for repaying your personal installment loan for bad credit.
• Interest rates that are fixed or variable. (Fixed rates mean that interest will stay the same throughout the life of the loan. Variable means the interest rates can fluctuate over time.) 
• Higher interest rates with higher or more fees. (This can vary from lender to lender though, so be sure to research lenders first to get the best rates for you.)
  

Installment Loans for Bad Credit Vs. Payday Loans

While payday loans are used for situations in which you need a smaller amount of money in a hurry (you could think of these as single, small installment loans for bad credit), installment loans offer more money that can be paid back over a longer period of time. What are the other differences between installment loans for bad credit and other payday loans? 

Eligibility For Installment Loans for Bad Credit Score

So how do you know if you're eligible for installment loans for bad credit? While requirements will vary by lender, you'll usually be asked to provide the following information: 

• Your full name 
• Your age and proof of identity 
• Income details 
• Your Social Security number 

Lenders of personal installment loans for bad credit can let you know if you qualify for a loan or not without running a hard credit check. When doing your research into lenders who offer installment loans for bad credit, remember to note who only requires a soft credit check, as this is less likely to damage your credit score.

How to Apply for an Installment Loan for Bad Credit?

Ready to apply for installment loans for bad credit? Follow these steps: 

1. Compare your options. Using the tips discussed above, compare and contrast your lending options. Choose the one that meets your needs the best. 
2. Have your documents ready. When applying for installment loans for bad credit online, you'll need to have your important documents ready. Gather up your government ID, banking details, proof of income, and Social Security card before applying. 
3. Submit your application. Once you've filled out your application, submit it either online or in-person in a timely manner. 
4. Receive funds. Once you're approved, you should expect to see your funds as soon as the next business day. They'll appear right in your bank account if you signed up for direct deposit during the application process.
5. Repay the loan. Make your payments on time and for the full amount every month to avoid any fees. Setting up automatic withdrawals can help you meet your payment requirements and not miss any deadlines.   
   

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