In the financial world personal loans and bad credit do not usually go together. Even at a time when the Federal interest rate has dropped to its lowest point in over 20 years, (which is good news for borrowers, the current financial crisis engulfing America, has caused the banks and lending institutions to be wary about approving loans on bad credit.

So what can someone with bad credit do to get a decent loan? Actually, more than you may think.

The following are several ways that you can make yourself more attractive to a lender even if you are dealing with bad credit:

Offer collateral.
By offering your assets as security against the loan you reduce the risk the lender assumes by giving you money. You can offer either your personal assets, such as real estate, or any business assets you may have if you own a business. Just make sure you properly assess the level of risk in offering these assets against a loan.

Get a co-signer.
Having someone someone co-sign on the loan will also increase your chances of getting approved- especially if you can get someone who is well-known and established in the community.

Request a smaller amount.
By requesting a smaller loan, you reduce the risk involved in offering it. Once you have successfully paid back the principle, you begin to rebuild credibility.

Get a bad credit loan or pay day loan.
With high interest rates and strict repayment schedules, these loans are typically unappealing to to the average consumer. But it if you can request a small amount and are able to successfully repay it, you are one step closer to rebuilding your credibility and getting better terms on a future loan.

For business owners: Separate your business credit profile from your personal credit.
Many business owners are unaware of this option, and they finance their businesses with their own credit. This is a costly mistake, since your personal credit profile will directly effect your business credit, and visa versa. By creating and building a separate business credit profile, you will be able to better protect your personal credit rating.

Try peer-to-peer lending.
Peer-to-peer lending is a relatively new form of financing that occurs directly between individuals without the involvement of a traditional financial institution. Numerous sites, such as Prosper.com, LendingClub.com, and Virgin Money, create a marketplace where borrowers and lenders can come together. Even among friends and family, everything is carried out formally and professionally. Many sites provide identification and verification services as well as an assessment of the credit risks. They also can provide documentation that covers all the loan's terms and conditions in addition to loan administration throughout the duration of the loan.

This is an attractive option for consumers with bad credit since there are fewer requirements which means more chances of receiving financing, and the borrower gets a chance to tell his or her story.

Learn more about this author, Suzie Brown.
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