Lots of people need personal loans in bad credit situations for many different reasons, but for those who have bad credit, getting money from a lender can be a trying and difficult process. Loan qualification and approval is often limited to those who have sparkling clean credit scores, generally above 660 or 700. For the rest of the population, it can be hard to locate fairly priced personal loan agreements. Some basic tips will help all kinds of "bad credit borrowers" get their hands on advanced money for financing a vehicle, starting up a business, improving a property or any other uses.

1. Avoid High Interest Rate Schemes

Among the many kinds of predatory lenders who charge extremely high interest rates to borrowers with bad credit, payday loans and auto title loans are often the worst offenders. Steer clear of these often shady shops entirely, and always ask even traditional lenders about how high interest can get, since lending companies often boost interest rates for customers with bad credit if they are approved.

2. Use Informal Lending 

One of the most obvious solutions for people with bad credit is to try to borrow from individuals first. If friends and family are not an option, since this can often put a strain on interpersonal relationships, take a look at available micro-lending web sites where private investors with a little capital choose debts to invest in. These alternatives can sometimes help individuals who have been blacklisted by their bad credit.

3. Evaluate a Cosigner

A cosigner is somebody who can get loan approval for a bad credit carrying customer by adding their name to the agreement. This can be problematic for a variety of reasons, and some lenders can be deceptive about adding a cosigner. Don't try to add a cosigner unless all parties are comfortable with the agreement and understand what they are signing up for.

4. Bring Down Credit Risk

Borrowers with marks on their credit can also use other factors to lower their common-sense lending risk. One of the simplest ways to do this is by showing income and assets. For example, if a person has seriously bad credit due to past bankruptcies or open judgments, but currently has thousands of dollars in the bank or owns a home or multiple vehicles, this can make him a better credit risk than his credit score implies. When these individuals hook up with the right lenders, those who are holding the debt will be able to overlook a bad credit score if there are mitigating factors.

5. Fix a Credit Score 

There's also the idea of fixing a credit score to lower credit risk and boost lending approval chances. Many times, the individual consumer can repair a credit score simply by pointing out errors in their credit history to the three credit agencies responsible for maintaining credit records. It all starts with getting your own credit score and evaluating your credit history. Other ways to repair a credit score include taking out the right small lines of credit and paying them off on time, as well as paying off old creditors and negotiating "clean slate" situations with even partial payment of old debts.

Take advantage of all of the above to help out with the task of getting approved for a personal loan when your credit is standing right in the way. Although a bad credit score can be a really daunting factor in seeking out lending agreements, fixing it can sometimes be easier than it seems at the outset. Creative loan shopping can also turn up some workable solutions for the interim.