How to Avoid Scam Loans with a “Less Than Perfect” Credit Score?

Last Update: May 22, 2020 Credit Report Loans Scams

In everyone’s life there comes a bad financial moment. It can be due to some unexpected costs, temporary job loss or something else. In such moments, people start looking for ways to get some fast cash, including getting loans. But in a hurry, most of you can make big mistakes because there are many scams on the market these days. And if you have a score that is less than perfect, then your situation looks bad.

Unscrupulous lenders target exactly these people – those who are in need of fast money, with bad credit score and people who don’t have a lot of knowledge about the loan market. No credit score – no problem, you need fast cash – no problem, you need money in a few minutes – no problem. This is how they work.

Although we can’t get you out of the bad financial situation that you are in or help you boost your credit score in a day, we will work on the third part – giving you knowledge about what to do if you find yourself in this situation. And don’t get us wrong. By this, we don’t mean that you have to spend a lot of time reading various materials to find the right offer for you. In this article, we will give you exact places where to look for personal loans.

Nowadays, the loan market is totally different than a few years ago. These days, there are so many legit lenders that will give you money very fast even if your credit score is not perfect. People just have to be more careful.

What are Payday Loans and Why They Should be Avoided?

Payday loans are short-term loans, typically of up to $1,000. People are required to pay them very fast in one installment – on the next pay day. Typically, this is in two weeks or a month. The APR is insane. It’s about 400% or higher, according to CFPB. CFPB also counted that, that per every $100, you will be required to pay $15 within a two-week period. But that is not the main problem with payday loans. If you don’t repay them on time, most of these lenders will offer you to roll over. This means that you will be requested to pay only the interest fee, which doesn’t lower the principal amount. This process continues until you repay it in full, which is also known as debt cycle. This is exactly what unscrupulous lenders want you to do.

Don’t get payday loans, they are predatory!

In addition, payday loans are illegal in many states. In others, they are highly regulated.

Auto title loans are an almost equally bad deal. The difference is that lenders require you to put your car in a collateral.

Auto title loans should be avoided!

Can I Get a Personal Loan on Reliable Rates?

Of course you can get personal loans, even if you have bad credit. Like we have mentioned earlier, the market is becoming much more flexible these days. Lenders compete among themselves to give you a loan faster and on better terms.

Benefits of Personal Loans:

  • Typical APR is 10% to 36%.
  • Amount is $1,000 to $50,000.
  • They are released really fast, in most of the cases within a day.

Tips to Get Better Loan Terms

  • Shop around

The best way to find the right offer for you is to apply for many companies. There are many lending companies that work even with people who have less than a perfect score. When you register with more companies, you are able to compare more offers and pick the best ones available to you. Applying for many loans won’t lower your credit score because these companies don’t perform a hard inquiry during the application process. Some of them have a minimum requirement for their credit score but there are also companies who don’t have this requirement at all.

  • Read the fine prints

Read the contract carefully and check for any hidden fees. Carefully check the APR, prepayment penalty fees, late penalty fees, refinancing options, rollovers and so on. For example, many companies will offer to change the contract and add many refinancing options if you ask that before getting the loan. Also, check their policy on how private your personal information will be.

  • Register only with legit and reputable companies

These are typically companies that make a lot of lists on big personal finance blogs. Most of them have a BBB rating of A+. If they have a lower rating, they still have to be an accredited business.

  • Lower Your APR

If your credit score is less than perfect, you will probably get a high APR. There are a few tactics that you can use to lower it significantly. One of them is to get a secured loan. If you put something in a collateral, like your car for example, companies feel safe and they are ready to offer you a low APR. You can also get a co-signer. In this case, again, the lenders feel that you will surely pay the loan on time and will agree to lower your APR. But you have to be really sure that you will pay it on time because you risk to lose your collateral or friendship with that person.

What other Options are Available for People with Low Credit Score?

  • Get money from credit unions and banks

While banks have more requirements for your credit score, credit unions work perfect for people with a fair credit or above. Banks are profit organizations and don’t care too much about loans. Instead, they care more about credit cards, because they are simply more profitable for them. Credit unions are non-profit organizations where you can get money. Credit unions spend more time evaluating your actual financial situation instead of only looking at your credit score.

  • Credit cards

Credit cards are available for all purposes. From a bad credit score to a perfect credit score. For some of you, this can be a great way to avoid getting a loan.

  • Avoid getting a loan

Are you sure that you really need a loan? There are many things that you can do in order to avoid the loan. Ask for cash from your employer in advance. Ask for some money from the people you know. Try to save some money or even to find some fast ways to make money online, like freelancing, for example. There are some many ways that can help you stay away from loans.


You always have chances to get a loan, even with a low credit score. Be pickier in order to find the best offers available to you. Finally, avoid payday loans and auto title loans.



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