Trying to find bad credit personal loans is a catch-22; you have bad credit, and want to reestablish a good credit history, but no lenders will extend you credit because you have bad credit! If you have damaged credit, you’ve probably already experienced this problem.

However there is some help available. More lenders are realizing that there is a market for bad credit personal loans, for individuals who want to rebuild their credit by paying on time, with secured loan and credit card products, as well as unsecured bad credit personal loans for borrowers with poor or damaged credit.

You can begin to rebuild credit with secured loans. These are loans that are backed by your own funds, put into a savings account so that they accrue interest, but the funds act as security for your loan. For example, you put $1,000 into a savings account, and then borrow against it for a 12-month note. You make payments, and the bank holds the funds in case you default. 

Nearly every bank will set up a secured loan for you. It might seem like it does not make sense to tie up your own money, but it does give you an opportunity to show you can make payments on time, and have a “paid as agreed” on your credit report, plus you get your collateral back at the end of the loan, with interest! 

You can also use collateral such as your home to obtain credit, if you don’t already have a home equity loan. Some lenders will work with your bad credit just because they know that by taking out your home equity loan, you can pay off some of your cards, improving your credit score after getting the loan. 

Another option is to get a secured credit card. Similar to the loans, you deposit a smaller amount with the bank, say $300 or $500, and get a line of credit for that amount. Many times the fees can be high for these cards, so check the terms, and how to get your collateral released when you qualify for non-secured cards. 

Finally, there are lenders who offer unsecured bad credit loans. Using these lenders is a good way to show you can rebuild your credit, because the loan does appear on your credit report as unsecured debt. The terms might be high, but be sure to find out whether you can pay off the loan early without penalty and do so as soon as possible by paying more than the minimum monthly payment. 

Remember to investigate and compare all loan terms thoroughly before you apply!

There’s a huge debate about whether someone deeply in debt should declare bankruptcy.  

Some credit advisors say it is better to work two jobs until the debt is paid.  Some advice (usually from credit counselors supported by the credit card industry) says that declaring bankruptcy will ruin your credit, and your life, for ten long years.  (So will registering with a credit counseling company, but they don’t tell you that part!)

Everywhere you find credit counselors telling you NOT to declare bankruptcy.  Look what would happen if you did that:  You would hire a lawyer; you would file your paperwork with the court, you would have a reorganization plan put together for you by the court, or have all your debt discharged, and you would NOT NEED CREDIT COUNSELING AGENCIES.  You would no longer be paying them fees month after month, nor would they be able to collect a percentage of the debt they get cancelled!  So they have a personal, vested interest in getting you to avoid bankruptcy.  Similarly, the so-called non-profit agencies who do not charge you a fee must be getting their money from somewhere – and they are – from the credit card companies.  You can expect they won’t tell you to file bankruptcy either – they will insist you try to repay your debt, no matter how long it takes and even though that too will ruin your credit for years. 

Let’s look at the facts:  The vast majority of bankruptcies are NOT people scamming the system, but Americans facing serious financial trouble – loss of a job, divorce or major illness without insurance to cover the cost.  Many Americans are living one or two paychecks away from financial disaster.  So when disaster strikes, they can barely put food on the table or afford to look for work, let alone repay credit cards. 

In addition, many people feel there is a stigma with declaring bankruptcy, that you are a failure, a cheat, a deadbeat.  Let’s get rid of that stigma right now.  In the business world, bankruptcy is called “bankruptcy protection”, not failure or cheating.  Business gets “protected” from it’s creditors – other businesses it owes money to!  How many times has Donald Trump declared bankruptcy?  If it weren’t for bankruptcy protection, he wouldn’t be the rich man he is today!  

Bankruptcy is there precisely to help American who find themselves in a hole too deep to dig out of.  It is in fact “protection” for you too.

There is no shame in bankruptcy.  It helps people regain their footing.  It helps your family keep your home where you are needed, and start over with money in the bank.  When you are in financial crisis, the laws of the United States have given you a second chance.  They are there to HELP you.  

If you are so deeply in debt that there is no way to pay all of your bills, for example you owe more than one and a half times your annual salary in debt, then getting a second job may not be an answer either, since you’d have to work two full time jobs to dig out.  Given that if you are in this financial situation, the stress of this on your family may be too much for you to handle.  If you are desperate for funds and then have to take yourself away from your family for even more time, or spend extra money putting your children into child care, then the burden of working more many be even worse that bankruptcy!

Bankruptcy will stay on your record a long time, but so will your bad credit repayment history.  Bankruptcy can also mean relief right now, from constant creditor calls, from worry, and give you a chance to get a fresh start.  Don’t write it off as an option, but consider it thoroughly and seriously with all the other debt reduction methods you are considering to get your financial life back on track.

More Americans are suffering under the weight of bad credit than ever before.  Overextended on credit cards, mortgage payments climbing, fuel and food prices increasing, are all contributing. 

One you get stuck with a bad credit score, digging out can be hard.  There are a few products available on the market for helping people regain their good credit, but it takes some time and concentration to do the right steps and avoid credit scams.

First, you can call your credit card companies and try to get your card payments reduces, get your interest rate lowered, or otherwise get some kind of payment holiday.  This can help you direct cash toward other expenses like food and gas for the car.

Next, you should close as many cards as  you can. Having fewer cards helps build your credit score.  And lower balances – not being maxed out on any card – also helps improve your credit score.  By getting some concession from your credit card company, you’ll have extras cash to put toward the principal each month instead of just making the minimum payment.

Third, try not to take the step of borrowing more money to pay off cards.  This usually backfires, as the borrower pays off balances, leaves the card active, and continues to charge on the card that was supposed to be closed.  Unless you are getting a good low interest deal, don’t take this step unless you are committed to closing the credit card account immediately when you pay it off.  You can also close an account that still has a balance; some card companies will then close the card automatically once the balance reaches zero.

Fourth, find a way to pay more than the minimum each month.  List your credit cards and other debts in order of highest interest rate to lowest. Starting with the first card, figure out how much extra you can pay toward debt each month. For example if you’re willing to skip  your manicure appointment each month, you can put the $25 toward your most pressing payment.  This helps reduce the principal balance, reduces your interest, and gets the card paid off faster.  In turn, your credit score starts to improve as well.

Last, don’t take out any more credit cards!  If your credit is so bad that you can’t get approved, look on this as a blessing in disguise, because it will force you to live with the cash you bring  home each month.  Once your credit cards are paid off, and having learned to live on what you earn, your income will be all your own to invest and grow wealth for yourself and your family.  Look forward to the day in the future when your payment plan will make that happen.

Getting a plan to fix bad credit is always desirable if you have a bad credit score.  Without credit available, waiting a year or two to repair your credit record can seem like an eternity. But the fact is that a  few simple steps can turn around your credit record so that you see improvement within just a few months. You can take these steps on your own with a do it yourself credit fix program, and without spending a lot of cash on a credit counseling service.

To start any credit fix program, you need to know what your current credit looks like. Get a copy of your credit report, but it can also be useful to order a credit report that includes your credit scores.  By subscribing to a service that lets you see your credit scores, you can monitor improvement of your credit score while you begin your credit repair program. A credit score service can cost under $10 per month.  However it’s not necessary to get scores to start fixing credit.  You might consider checking your credit score once at the beginning of your program, and again after several months into your credit fix program.

What’s the most important thing you can do to fix credit?  The hands down most important item is to start paying on time. Even if you have bad payment history on your credit report, starting to make current payments can improve your credit score within just a few months.

Another way you can fix credit fast is to close some cards that you have open. If you have credit cards with small balances or no balances, consider paying those right away and closing the accounts. Often, having multiple credit cards available to you can score against you with credit lenders.  The sooner you can start closing some cards, the sooner they will come off your credit report.

It’s important to remember that  most credit reporting agencies will tell you that it can take three months for a change in your credit file to appear.  Sometimes no matter what you do it will take those three months for a change to show up and affect your credit score.

Another thing you can do to help your credit score might be to apply for new credit. That’s right: if you have very bad credit, you may be able to open a new bad credit account, such as a secured credit card, to give you an opportunity to start rebuilding credit. Having a new card that always shows a “current” payment history can be beneficial.

What if your credit is so bad that you have year or more of negative credit history?  If you find yourself in this situation, you may have to take more serious steps. If you are unable to make your credit payment, you may want to consider bankruptcy. A rule of thumb is:  If your debt if more than twice your gross takje-home pay, you probably will not be able to dig out of the hole (unless you get a second job). This is when you might consider bankruptcy.

If you have a year or more of bad credit, a bankruptcy will not make your credit history or score that much worse. Lenders are already looking at seven years of your credit history, and bad credit will make an impact even without a bankrtupcy.  By declaring bankrtupcy, it could help lighten your debt load and give you a chance to start over with a cleared-off credit report.  (Remember, though, that some things cannot be wiped out by bankruptcy, such as support payments or student loans.)  

Also contrary to popular belief, having a discharged bankruptcy on your credit report can lead to creditors offering you new credit (at higher rates). They know you don’t have any other debt once your bankruptcy is discharged.  As a result, your debt ratio, or the ratio of debt to income, is reduced when your debt is wiped out.  You can find yourself approved for credit cards, secured loans such as a car loan, and even some other personal loan products in as little as a year or two.

Filing a bankruptcy can be expensive however. Most bankruptcy lawyers will provide a free consultation up to an hour or so for the first meeting.  You can see for yourself whether bankruptcy is the right course of action for you to take.  But attorney fees for filing bankrtupcy can cost $2,000 and up depending on your particular situation.

What about credit counseling agencies? First, beware of any credit service that promises to improve your credit score by 100 or more points within 30-60 days. It is virtually impossible to do this legally. In addition, you can pay significant fees for these services.  Some non-profit counseling agencies will help you for free.  However, you should know that many of these agencies are financed by the credit card industry. That’s why they can provide services for free.  But they will mainly be concerned with helping you pay your credit card debt in full and on time. They will not help with secured loans such as car or house payments and will counsel you away from bankruptcy if at all possible, even if it’s the best option for someone with serious credit problems.

That presents an incomplete picture of what your options really are. They also may not tell you that registration with their credit counseling agency, and begin a repayment plan, also appears on your credit report, where lenders will see it and refuse to give yo credit. This is nearly as damaging as having a bankruptcy on your credit report!

Bankruptcy as an option is a very good choice for people who are not earning enough to pay all f their debt.  You may discharge debt or sometimes enter a repayment plan that is court-ordered, depending on your circumstances.  Either way, you have options that the credit counselors won’t tell you about, even though using their services can be just as detrimental to your credit.

The bottom line is that if you are trying to find a fast credit fix, there are absolutely steps you can take to see improvement in your credit score in the short run.  In addition, many credit products are still available to individuals with poor credit. Taking steps to fix credit in the short run can help you begin a program to improve your credit over the long run, and see improvement can motivate you to stick with your credit fix program.