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Getting a Personal Loan with Bad Credit

Although it's possible to get a loan with bad credit, people with bad credit should expect to pay a higher interest rate and fees to get the loan. Banks tend to have stricter lending requirements, while credit unions have more flexible lending requirements so you can apply for a personal loan with bad credit.
At Credit Union of Southern California (CU SoCal), we make getting a personal loan with bad credit easier. We offer a series of personal loans to ensure you’ll be able to access money that helps build your credit.
Even if your credit history isn’t perfect, don’t worry, because unlike a traditional bank, we don’t think that your credit score tells the whole the story. Come in and talk to us and let’s see what we can do.
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our personal loans and other banking products. As a full-service financial institution, we look forward to helping you with all of your banking needs.
Read-on to find out how to get a personal loan, even if you have bad credit.

Get Started on Your Personal Loan!

What Is A Personal Loan?

A personal loan is a loan granted to an individual based on their creditworthiness (not collateral), and is sometimes called an “unsecured loan” (since no collateral is used to secure the debt).
Personal loans are offered by credit unions, banks, and online lenders. Each lender will offer different types of personal loans, have unique application and lending requirements, and charge a different interest rate. Always shop around and compare loan rates and terms before you sign for a loan.
Learn more by reading What Are Personal Loans.

What Can Personal Loans Be Used For?

Personal loans can be used for any purpose, including making home repairs, paying medical bills, consolidating high-interest debt, covering a large unexpected expense, and paying for a wedding or funeral. The possibilities are endless.
Find out more by reading What Can I Use a Personal Loan For?

Why Credit Score Is Important

Credit history and credit score are a central part of any loan application process, whether you apply for a personal loan with bad credit, or apply for a credit card, auto loan, or mortgage.
All lenders will look at a potential borrower’s credit history and credit score as the primary factors to determine the borrower’s ability to repay a loan. Some employers will even look at a job candidate’s credit score during the hiring process to gauge the individual’s trustworthiness and ability to manage finances.

How Credit Scoring Works

Credit scoring is a system creditors and lenders use to help determine whether to give a line of credit or approve a loan application.
An individual’s credit history — including information about their credit, bill-paying history, the number and type of accounts they have, late payments, collection actions, outstanding debt, and the age of accounts — is collected from your unique credit applications and your credit report.
A credit scoring system awards points based on the above factors, and generally indicates how creditworthy a person is and how likely it is that someone will repay a loan and make on-time payments.
FICO Scores, generated by the most widely used credit scoring company, are calculated using many different pieces of credit data in your credit report. This data is grouped into five categories: payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
Here are more detail on the factors that impact your FICO  score:
Credit History Length: How long your credit accounts have been established and how long it has been since you used certain accounts?
Payment History: Have you paid past credit accounts on time?
Credit Mix: FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.
New Credit: opening several credit accounts in a short amount of time represents a greater risk, especially for people who don't have a long credit history.
Amounts Owed: If you are using a lot of your available credit, this may indicate that you are overextended. Lenders may be less likely to lend to you.
Credit Inquiries: Soft inquiries such as viewing your credit report will not affect your FICO Score. Hard inquiries such as applying for a new credit card or mortgage will affect your score.
Debt Burden: This is the total amount of debt you owe, due to loans and credit cards. Having a large debt burden can limit the amount of new credit available to you.
For more details read our blog article, How to Rebuild and Improve Your Credit Score.

What's Considered Good or Bad Credit?

The most widely use credit scores are FICO scores, which were developed by Fair Isaac Company, Inc. According to, most credit scores have a 300-850 score range. The higher the score, the lower the risk to lenders. A "good" credit score is considered to be in the 670-739 score range.

How Your Credit Score Affects Borrowing

While having a bad credit score or a history of credit problems can make it more difficult to get approved for personal loans, credit cards, and other loans, it’s not impossible to get a loan with bad credit.
Most people who get a loan with bad credit will pay a higher interest rate. Statistically, people with bad credit are more likely to make late payments or not pay debts at all, so the higher interest rate and fees protect the lender from lost revenue.

How to Get A Personal Loan With Bad Credit

If bad credit is a concern, here are some tips to fix your credit:
Check Your Credit Score: Under federal law, you are entitled to a free copy of your credit report once every 12 months from each Credit Reporting Agency (Credit Bureau).
To request your credit report visit
Or, you may call each of the three major credit bureaus to request a report:
Equifax: 800-685-1111 (option 3)
Experian: 888-397-3742
TransUnion: 800-916-8800 (option1)
CU SoCal offers free credit scores and reports to all Members through Credit Score and More in Digital Banking, including the ability to dispute mistakes online.

If you find an error on your credit report, you have a right to dispute the inaccuracy. There is no cost or fee to dispute mistakes or outdated items on your credit report. You don’t need to hire a credit repair company to do this for you. Simply contacting the credit bureau may resolve inaccuracies and could result in a credit score increase.
Take Steps To Improve Your Credit Score: As mentioned above, reporting and correcting inaccuracies on your credit can boost your credit score. Another way to raise your score and build good credit is by getting a Credit Builder Loan.
Offered by credit unions (including CU SoCal) and banks, credit builder loans come with a 12-month term during which you make monthly payments toward the payment of a particular fund amount (usually $600 - $1,000).
At the end of the 12 months the money is yours. The on-time payments you’ve made are reported to the credit bureaus, which builds a positive credit history and score.
Shop Different Lenders: If you apply for a personal loan with bad credit at a traditional bank, you could get turned down for a loan. Credit unions have flexible lending requirements and are more likely to lend to people with bad credit. Start shopping for a personal loan at the financial institution where you do your banking now. Your current lender will have all of your account information and may be more likely to approve your application.

Personal Loan Alternatives

If you find that getting a personal loan with bad credit just isn’t possible, here are some alternatives for getting money and improving your financial situation:
Nonprofits, Charities and Religious Organizations: Community and religion-based organizations offer resources including food banks, clothing donations, and emergency housing options. Many can help locate work opportunities and apply for financial assistance.
Explore Options to Pay off Bills: If you need extra cash, it could be a good time to consider debt consolidation to pay off or pay-down large outstanding balances and high interest credit card debt. Credit unions and banks can provide you with options, so you can pay-off bills at a lower interest rate, freeing up money to use on other expenses.
Paycheck/Payroll Advances: If you are currently employed, ask your employer if the company has a payroll advance policy that would let them pay you in advance of your usual payday. Payroll advances often come with a fee, so be sure to ask about the terms and conditions.
Family and Friends: This can be a quick way to get the money, however, borrowing from family or friends can have challenges. To avoid bad feelings and discrepancies in the loan conditions, you may want to create a document stating the conditions and duration of the loan and whether or not you are expected to pay interest, and if so, at what rate. You and the family Member or friend should agree to the terms and sign the document. Accepting loans from family Members or friends could negatively impact your relationships.

What To Watch Out For

Can you get a personal loan with bad credit? Absolutely! However, there are some “bad credit” or "no credit check” loans that cost the borrower more due to high interest rates, fees, and potential loss of collateral. Be careful before you opt for one of these loans:
Payday Loan: This short-term loan comes with high fees. According to, a payday loan is usually repaid in a single payment on the borrower’s next payday, or when income is received from another source such as a pension or Social Security. The due date is typically two to four weeks from the date the loan was made. Lenders don’t usually charge interest on payday loans; instead, they charge an application fee relative to the amount borrowed, which typically range between $15 and $35 per $100 borrowed.
Title Loan: A title loan is based giving a lender the title to your vehicle, which can be for a car, truck, or motorcycle. According to, you also pay the lender a fee to borrow the money and you usually have to repay the loan in 30 days. Car title loans can be very expensive. If you cannot repay the money you owe, the lender can take your vehicle.
No Credit Check Loan: Ideal for people with bad credit, this option doesn’t require a credit check as part of the approval process. The danger is in the high interest rate you’ll pay on the loan amount, which could put you further into debt.

CU SoCal Personal Loans

CU SoCal is helping Southern Californians get the funds they need to pay for life’s necessities. Our personal loan features include:
  • Financing from $500 to $30,000
  • Rates as low as 2.50% + Share Certificate Rate
  • Terms up to 120 months for the lowest possible monthly payment
  • Line of credit option for access to funds when you need it
  • No application fee
  • No prepayment penalty
  • No funding fee
 Get the details on CU SoCal Personal Loans.

Why Savvy Consumers Choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including car loans, personal loans, mortgages, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation consultation with one of our auto loan experts.
Get Started on Your Personal Loan!

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Building Better Lives

Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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