One of the best pieces of financial advice everyone should follow is this: Always have an emergency fund.
Unfortunately, some people find it hard to build one, especially when their priority is to pay their bills and debts. Add this to the stress of trying to find cash for unexpected expenses, and it’s easy to see why there are many folks who have trouble saving money for emergencies.
Now, if this describes you, then it helps to know more about personal loans. Here, we’ll talk about how you can get a small personal loan with bad credit, and how personal loans, in general, can help you build credit. We’ll also discuss how even with debts to pay, you can start saving for the unexpected.
How to Get a Small Personal Loan With Bad Credit
If you have bad credit, getting a small personal loan is the easy part. Just google “small personal loans” and you’ll see a number of lenders to choose from.
The challenging bit is making sure you’re not getting a loan that’s impossible to pay back. You see, some lenders offer loans that are easy to apply for because they don’t even check credit scores. However, a closer look at their repayment terms and interest rates will have you wondering if you’re walking into a scam.
Even for a small loan, it’s always good to shop around. You should also remember to check your credit score to know where you stand and crunch the numbers to see if you can repay the loan. Another thing to keep in mind is to read reviews about lenders to know which ones are safe to borrow from and which ones to avoid.
When you’ve chosen a lender, prepare the necessary documents such as pay stubs, W-2s, completed income tax returns, and other financial statements. Tip: If you’re trying to get small loan approval from a bank or credit union, you may need to include detailed written explanations for credit problems.
Personal Loans and Raising Your Credit Score
Taking out a personal loan isn’t a bad thing, but your credit score will take a hit when you miss payments. This is why you should only get loans you can pay in a timely manner.
The more you’re able to make payments on time, the better it is for your credit score. Over time, this can help build your credit, which could help you qualify for loans with better payment terms and interest rates.
Bonus: Anyone Can Save Money for Emergencies
After paying off a loan, your next goal should be to build an emergency fund. Yes, it’s challenging, but it’s better than always worrying where to get money in case an emergency strikes.
To help you get started, take a look at your expenses for six months, and then figure out how much money you want to save. Next, open a high-yield savings account, and automatically transfer money to this account every time you get paid.
Also, don’t ignore piggy banks. When you fill one up with loose change, you can add this to your emergency fund. You can also have your tax refund deposited directly into your emergency savings account.
Want More Personal Finance Tips and Advice?
Now that you know more about getting a small personal loan with bad credit, are you interested in learning more about personal finance?
If yes, feel free to browse our other articles. We also cover other topics including business, real estate, lifestyle, and more.
