How to Get Different Types of Loans Despite a Poor Credit History?

You can still be approved for various types of loans even if you have bad credit. Loans are available for people with poor credit scores, bankruptcies, foreclosures and even car repossessions. However, you can expect to pay sometimes staggering interest rates, or you may have to place money in a bank account as collateral.

Instructions

1

Start by seeking a secured credit card -- the easiest full-featured credit card to get with poor credit. Ask your bank or credit union if it offers secured credit cards, or seek a referral from a friend. You can also review secured credit card offers online. You'll be required to place money in a bank account as collateral, and your credit line generally will be 50 to 100 percent of the amount you have on deposit. Make the deposit and pay any required fees to obtain the card.

2

Establish a positive credit history with the secured card by making all payments on time and remaining under the credit limit. Consider opening a second secured account and establish a positive repayment history with it as well. After several months, apply for other types of cards that could help boost your score, such as gas cards or department store cards.

3

Watch your credit scores improve as you establish positive payment histories with the new cards. Your credit may still be considered poor -- but improving. Use that momentum to obtain other types of credit. Approach your bank, credit union or another lending institution about a signature loan or automobile loan. The responsible manner in which you have utilized your new credit accounts should help you obtain various types of loans despite your poor overall credit. This strategy works best over the long-haul, or you can go on to the next step for even faster -- but more expensive--results.

4

Skip secured cards altogether if you'd rather not have to put up cash as collateral. With your poor credit score you can still get credit. If you're shopping for a car, tell the dealer up front that you have poor credit. Chances are the dealer will have relationships with several finance companies or other lenders who will be happy to grant you credit -- at interest rates up to 25 percent or more. Lenders who specialize in loans to people with poor credit are known as sub-prime lenders. There are sub-prime lenders for nearly every type of loan. Find sub-prime lenders by looking past traditional banks and credit unions and focusing instead on small finance companies, car dealers offering their own financing and even rent-to-own stores that also offer credit terms. Pay-day loan stores and their online counterparts are also options. Ask relatives and close friends with poor credit how they've been able to find credit, and follow suit. You'll pay a lot more in interest with this strategy, but your objective will be accomplished.