Obtaining a Personal Line of Credit with Bad Credit or Poor Credit History

Lines of credit are useful for borrowers who are trying to meet personal or financial goals or for borrowers needing to pay for necessary expenses. Whether paying for unexpected medical bills or car repairs, or wanting to make a purchase or complete a home repair, there are times when having a line of credit is helpful. However, when faced with needing to obtain a line of credit, borrowers with a poor credit history can quickly become frustrated. They may find it difficult or impossible to get approved for a line of credit offered by traditional banks. Fortunately, there are other solutions available.

Why Traditional Lenders Won’t Approve Borrowers with Bad Credit

Obtaining a personal line of credit from a bank is not always easy. While a line of credit typically offers higher credit limits and lower interest rates than other lending options, a borrower generally needs to have a good credit history when obtaining a line of credit from a traditional bank or lender. This is because lenders want to offer their most favorable terms to their lower risk customers. For borrowers who have a less-than-perfect credit history, obtaining these kinds of credit lines from a bank may not be possible.

An Alternative Line of Credit Solution

While banks and traditional lenders may not extend credit to those who have poor credit history, there are alternative lenders that may be able to offer lines of credit to people who have bad credit, as long as they can provide proof of regular income. Lines of credit from these lenders are usually for smaller amounts than those offered by traditional institutions. They also have higher interest rates than lines of credit offered by traditional banks, but they may offer a way for a borrower to obtain credit when traditional banks decline the loan application. A line of credit from one of these types of lenders may provide borrowers with an opportunity to get the financial assistance they need.

Lines of credit from alternative lenders can be for a few hundred dollars to a little more than a thousand. While this line of credit maximum amount may be lower than amounts offered by traditional banks, it may be more than the amount borrowers can obtain from a cash advance on their credit card. Amounts allowed as a cash advance on a credit card are typically a percentage of the total credit limit on the card, and the cash advance interest rate is typically higher than the interest rate charged for credit card purchases. Having a line of credit may allow borrowers to access a larger amount of cash needed to cover an emergency expense or large purchase.

Visit our FAQ page to learn more about our personal lines of credit. Lines of credit should only be used as a short-term solution for times of financial need and should not be part of a long-term strategy for managing finances. Borrowers should ensure they understand the terms of any loan for which they are seeking approval, including the credit reporting policies of lenders, and should ensure their own ability to meet repayment obligations before signing any loan agreements.

The content on this site is for informational purposes only and is not professional financial advice. Ladder Credit does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.

*Not everyone will be approved

The line of credit account is designed as a short-term cash flow solution and not designed as a solution for longer term financial problems. Additional Fees may accrue if the outstanding principal balance is not paid at the end of the cycle. Credit counseling services are available to consumers who are experiencing financial problems.