Personal loans offer a fast and easy way to secure money without the need to provide collateral. Weighed against the result of not keeping up with bills or the need to cover a financial emergency, personal loans are often the best choice.

Personal loan terms are based on your credit rating and debt to income ratio. Because they are unsecured, this type of loan presents a higher risk to lenders, which means you’ll pay higher interest rates and fees.

Here are 5 tips for securing a personal loan for bad credit that will help you get the money you want with the terms you need.

Check your credit score

Lenders evaluate you based on your FICO credit score. If your score is below the mid-600 range, you may only be eligible for bad credit loans. People with lower credit scores typically pay more money for access to loans and credit cards. For this reason, it’s smart to check your credit report for inaccurate information.

Federal law gives everyone with a Social Security number the right to see their complete credit report from each of the three major credit reporting agencies (TransUnion, Equifax, and Experian) once every 12 months at no charge. You can access those free credit reports at www.annualcreditreport.com.

Improving your credit score takes time, but here are some things you can do right away:

Look closely at each of your credit reports for errors

Identify late payments

If your budget allows, put your credit card payments on auto-pay

Make payments on credit cards that are larger than the monthly minimum, to lower your utilization faster.

If you have accounts that have recently gone into collections, contact the company and make payment arrangements

Look up your state’s statute of limitations on unsecured debt to make sure that the credit bureaus aren’t reporting information that’s too old

Let your hard credit checks expire over the year. Read more here.

What to do about mistakes on your credit report

If you find mistakes on your credit reports, you have the right to dispute the information with the credit reporting agency. They have 30 days to investigate the information. If the lender can’t substantiate their claim, federal law states that the credit reporting agency must remove the information.

Making the decision to borrow money by initiating a personal loan is a big step. During the process, you must be your own advocate. The first offer you receive may not be the best you could get, so take your time and make the decision that’s right for your individual financial situation.

Research the terms and conditions

Many people prefer a personal loan to a home equity loan because they aren’t required to provide collateral. While interest rates may be higher on a personal loan, there’s no risk of losing property or possessions if the worst happens and you can’t make the payments on time.

Also referred to as, “the fine print”, the loan contract doesn’t always cater to the needs and wants of the borrower. Be aware that signing paperwork that includes terms that aren’t in your favor could set you up for financial disaster.

If your credit score is in the low range, you may not qualify for a conventional personal loan. This means you’ll pay more interest and higher fees on the loan. It’s especially important to make sure that the loan payments fit into your budget. Failing to make every payment on time could hurt your credit score, depending on whether the lender reports payment activity to the credit bureaus.

Shop Around

You can easily access any lending institution through their website. Many banks, credit unions, and online lenders encourage online applications. This makes comparison shopping faster, so there’s no reason to take the first offer you receive. Since terms and interest rates vary widely, it’s important to read and understand the loan documents before agreeing to accept the loan.

Remember, lending institutions make money by offering loans with interest rates and fees. Make sure you only do business with lenders that offer favorable terms. Pay special attention to whether you can pay off the loan early without penalty.

Be Careful When Consolidating Credit Card Debt

One of the most popular reasons for taking out a personal loan is to consolidate credit card debt at a lower interest rate. The ultimate goal of this type of loan is to pay off the debt faster than you could if you simply made the minimum payments on each of the individual credit cards.

Many people run into problems when they consolidate credit card debt because paying off the credit cards creates a “zero” balance. Instead of putting the cards away for emergencies or cancelling the accounts, they go shopping.

At this point, they find themselves with a new personal loan in addition to more credit card debt. Think carefully about this temptation and make sure you can resist before you decide to use a personal loan to consolidate credit card debt.

Borrow only as much as you need

If you know exactly how much money you need, borrow only that amount. Setting yourself up for a higher monthly payment by taking out a bigger loan than necessary could compromise your ability to make payments on time.

Do yourself a favor and borrow the least amount of money possible. If the lender reports to the credit bureaus, making your payments on time will help boost your credit score.

Here’s how monthly payments go up as you borrow more money:

Borrow $1,000 @ 20% interest for 24 months: $50.90/mo

Borrow $1,500 @ 20% interest for 24 months: $76.34/mo

Borrow $2,000 @ 20% interest for 24 months: $101.79/mo

Borrow $3,000 @ 20% interest for 24 months: $152.69/mo

Borrow $5,000 @ 20% interest for 24 months: $254.48/mo

Borrow $7,000 @ 20% interest for 24 months: $356.27/mo

Rachel Morey

Writer Rachel a writer based in the Midwestern United States. She specializes in personal finance, insurance, retirement, and credit. Her work has appeared on over 100 websites, for example print publications including Worth, Kiplinger’s Retirement Planning, Money Today, and Startup. Read more »