Borrowing with a Fair or Bad Credit Score

Borrowing when you have a bad credit score can be tough. It’s not only unlikely that you’ll succeed in getting a loan; you will most certainly need to pay a significantly higher interest rate than you would if you had a good credit score.

Private Loans:

                Banks and credit unions, although also consider other factors, rarely ever give out loans to people with a credit score below 660. Private lenders, however, can be more flexible and relaxed. Generally, you’ll need a minimum credit score of 580 to get a private loan, but the better your credit score is, the more options you’ll have to choose from. Private loans also have a few downsides, which are mentioned below.

  • Their interest rates can be much higher than bank loans.
  • You might additionally have to pay an origination fee or have the origination fee deducted from your loan.

Unsecured Loans and Secured Loans:

               While secured loans are loans that use your property or other valuable assets as collateral, unsecured loans solely rely on your creditworthiness. Here are some pros and cons of unsecured loans and secured loans.

Secured Loans:


  • Secured loans can have much lower interest rates than unsecured loans.
  • Your credit score isn’t much of a factor, so secured loans are ideal for people with bad credit scores as well as with fair credit scores.
  • Secured loans can offer more options regarding term lengths.
  • You can potentially get a much higher sum with a secured loan than with an unsecured loan.


  • The borrower has to be willing to submit their property as collateral in order to get a secured load.
  • The borrower could lose their property if they continued to fail to pay, consequently increasing their debt till it’s a size equivalent to what the collateral is worth.
  • Although secured loans allow you to borrow a much larger sum than unsecured loans, they’re still bounded by how much your collateral is worth.

Unsecured Loans:


  • You don’t have to worry about losing your property as you would in secured loan deals.
  • You can get an unsecured loan even if you don’t own anything that secured lenders would be willing to accept.


  • Unsecured loans have significantly higher interest rates since making sure you’re able and have the incentives to pay your debts costs the lender. The lender also has to compensate for a small but very real fraction of people that succeed in running away with their money.
  • Your credit score is a big factor, and it’s really hard to get an unsecured loan with a bad credit score.
  • You can only get a limited amount with an unsecured loan.

                An easier and more preferable way to get a loan is to get it from a lender who personally knows you. Since they can trust you personally, you have a better chance of getting the loan. They’ll also be willing to agree to much lower interest rates. You can also increase your chances of getting a loan by demanding a smaller loan or, as mentioned above, considering a secured loan. Finally, having a better credit score will serve you in almost every case. One way to quickly improve your credit score is by paying down your existing debts and bills.