Lenders Taking Low Credit Scores

The three major credit bureaus use the FICO algorithm, which takes into account payment history, types of credit, debt owed and recency of credit, to determine a person's credit score. Having a good FICO score -- 640 or above according to The Credit Scoring Site -- can be crucial in gaining access to loan financing, including car and mortgage loans. Additionally, individuals with scores below 640 often pay higher interest rates. However, a few loan options are available to individuals with less-than-perfect credit.

Independent Auto Dealerships

Independent auto dealerships, often called "buy-here, pay here" dealers, typically extend auto loans to individuals with less-than-perfect to bad FICO scores and credit histories. These dealerships, which typically sell low-price used cars, process their loans "in house," avoiding third parties such as banks and credit unions, allowing them to get around the typical credit score requirements. However, these dealers ask extensive questions on an individual's financial situation and will not allow a person to purchase a vehicle he cannot afford. Additionally, these dealers often require a substantial down payment before issuing a loan to an individual.

Federal Housing Administration

The Federal Housing Administration, a federal agency designed to increase homeownership and improve housing conditions across the United States, issues FHA loans to borrowers with less-than-perfect credit. Unlike many low-credit-score lending options, FHA loans feature relatively low interest rates and 3.5 percent down payment amounts. However, as of January 2010, a borrower must have a credit score of at least 580 -- just below the "good" range -- to qualify for a 3.5 percent down payment FHA loan, although those with lower credit scores can still qualify for FHA mortgages with higher down payments.

Payday Loan Organizations

Payday loan organizations issue cash advance loans to individuals with full- or part-time employment. These loans typically include a term of two weeks or until an individual's next payday. These companies do not usually run credit checks, meaning individuals with low credit scores can obtain financing. However, payday loans often feature very high interest rates, sometimes as high as 400 percent APR, according to a January 2011 article in The Motley Fool, an online personal finance magazine.

Pawn Brokers

Pawn brokers allow individuals to obtain loan financing by offering up a piece of valuable property. Since the property secures the loan, pawn brokers rarely perform credit checks, allowing people with low credit scores to obtain pawn financing. However, pawn loans often include high interest rates and finance charges. Additionally, borrowers who fail to pay back pawn loans lose their pawned property, although failing to pay a pawn loan will not have adverse credit effects or lead to collection action.