In today’s rough credit markets getting a loan with a low credit score is extremely difficult. In fact, in many areas it may be next to impossible to find a bank or credit union that is willing to extend credit to potential customers with less than perfect credit, further limiting the options of those looking for a loan with a low credit score.
In past years, banks and credit unions would be willing to work with people looking for a loan with a low credit score as they had a lot of liquidity on hand. With the economic downturn of 2008 and the collapse of many banking institutions, things changed. The credit markets went into a deep freeze and trying to get any kind of loan, much less a loan with a low credit score, became extremely difficult. While times have improved for banks and credit unions, they still remain extremely cautious.
As a result, getting a loan with a low credit score will require a lot of effort put forth by the potential customer. If they can find a bank or credit union willing to work with them, they will find the terms of the loan agreement a lot tougher than they were two or three years ago. The interest rates will be significantly higher, the length of the loan may be less and there will probably be a significant requirement of collateral for large-scale loans. Because they are now highly adverse to risk, lenders look at giving loans to those with a low credit score as something to be avoided unless they can receive something worth their while in return. In many cases, the only way someone can get a loan with a low credit score is if they have an established and successful relationship with a bank.
Many individuals looking for a loan with a low credit score don’t have such a relationship to fall back and have to look for loans elsewhere. This takes them to short-term loan businesses, who will give out loans to nearly any customer, but require the loans to be repaid quickly at extremely high interest rates.