Having a low credit rating is widely considered to be highly damaging when it comes to applying for loans. But in fact that kind of credit status only has a limited influence over the whole deal. With the right application, it is possible to secure even a large personal loan with bad credit.

It might seem that granting loan approval despite poor credit scores is taking on a major risk, especially on the part of the lender. In fact it is, but there is method in such madness. Remember, lenders have carefully weighed up the respective chances of loss and profit from these deals before ever making a decision.

There is an array of loan sources to choose from, with online lenders offering such opportunities to bad credit borrowers where traditional lenders are usually not willing to. So, even when the applicant is seeking a large personal loan, there are terms available that make even a loan of $30,000 affordable.

Basic Terms To Consider

As with most lenders, online lenders offer a variety of loan packages to ensure a viable financial option to the widest range of applicants. However, they break down to two basic types - secured and unsecured. The one chosen when applying for a large personal loan with bad credit has a big impact on terms.

The most popular option is the unsecured version. This is mainly due to the fact that nothing is offered as security, and therefore, should the loan be defaulted upon, no personal possession can be lost to the lender in compensation.

However, when seeking loan approval despite poor credit scores the best option is the secured loan. By providing something of value as collateral, the borrower accepts the risk of loss which makes the lender more open to granting approval. When it comes to large personal loans, collateral is often expected.

Avoiding The Collateral Issue

Of course, if a loan of $30,000 is needed, it can be difficult to find something worth $30,000 to offer as collateral. But the problem can be avoided by providing a cosigner on the loan - someone willing to accept responsibility for repayments should anything go wrong.

The single largest problem when applying for a large personal loan with bad credit is convincing the lender that they will get their money back, and a cosigner is the ideal security in that sense. While collateral can provide compensation, lenders prefer to simply receive the due repayments each month.

A cosigner guarantees to make repayments if the borrower has trouble doing so, thus making approval despite poor credit scores a viable option. Still, the lender will insist that the cosigner has an excellent credit history and enough excess income to meet the repayments on the large personal loan, if that becomes necessary.

Improving Your Approval Chances

There are hurdles to clear when seeking a large personal loan with bad credit, with the low credit score making many traditional lenders nervous. But there are ways to improve your chances of overcoming such problems.

For a start, it may be an idea to improve your credit score. This can be done by taking out a series of small personal loans, repaying each one quickly. With each loan repaid on time, the credit score is adjusted upwards. Before long, the chances of getting approval despite poor credit scores are much greater.

An alternative option is to take out a consolidation loan and clear debts in full in one go. There is also an advantage in that there is less pressure to clear a longer-term loan, and sufficient income should be freed up to make repaying a large personal loan easier.