Having bad credit certainly has an effect on your chances of getting a loan. Of course, there are degrees of bad credit. Depending on your situation it may be possible to do other things to help make up for the issues in your financial history so that you can be approved for financing.

A lender decides who to lend to based on how likely it is that they will repay the amount they’ve borrowed. One of the major factors in evaluating how likely this is, is their financial history. Your credit score is calculated based on the information in your financial history, which is why the score itself becomes so important. Not only do lenders use this information to decide whether or not to approve your application, but also to decide what interest rate they will offer you. The worse the chances are that you will make your payments on time, the higher the interest rate they will offer you.

Every lenders criteria is going to be different, so if you get turned down at one, or offered a horrible rate, you can always look at other lenders. Keep in mind that when you apply, however, this will show up on your report and it does not look good for you to have many applications at once on your report.

If you’re applying for a loan the application will ask you about your employment history. If you have a well paying job, that you have been at for a long period of time, this will help on your application. This shows stability and that you will be able to make your payments.

If you have a large percent down payment prepared for whatever it is you are using the financing for, this will also show that you were able to save up that money and handle your finances, another good thing to have.

If you have made recent efforts to improve your credit history you should briefly point this out to a lender so that they can take into consideration that your circumstances have changed. If there is a clear reason for why you had the past financial problems that can be summarized in an approximately two sentence explanation do tell them, lenders will care about this. Examples include medical issues, divorce, or other unusual life circumstances.

While bad credit definitely effects your chances of getting a loan, if you need financing there are options available to you. Be aware, however, that your interest rates will be high. If you make all of your payments on time though this may be a great opportunity for you to build up a new history of on time payments for your credit history.