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Lenders have a lot to consider before they'll even think about processing a bad credit personal loan. It's easy to understand why, too: if the applicant in question has a poor credit history then giving them money might prove a risk to the loan company.

If you've got a bad rating then it's advantageous to know a little bit about the process through which companies process a bad credit personal loan. And even if your credit is poor, don't take it personal: there are always ways to get around the problem.

The major term to keep in mind is credit scoring. It's basically a method by which a company calculates the applicant's likelihood to repay a loan based on three factors. They are as follows:

• Capacity. How have you repaid debts in the past? Were they done as a whole or in smaller payments? Were they done on time? The total length of any past loans comes heavily into play when considering a person's capacity.
• Capital. What kind of job do you hold (if any)? Do you make a sufficient amount of money to repay the loan you're requesting? Is your credit sufficiently strong to handle the loan or will you be bad and renege on it in the end?
• Character. A much more personal category for most people. What kind of person are you? Are you responsible enough to be trusted to pay off a loan? Or will you simply take the bad money and skip town? The credit company takes character heavily into account when approving a loan for somebody with a bad history.

The companies will take these statistics and average them out to discover just how capable of repaying a personal advance you are. If you manage to luck out they'll approve your application and give you the money.

If you've got a bad credit personal history but still think you're sufficiently capable of repaying a debt, then by all means apply. You might be surprised at the amount of leeway companies will allow for if you're possessed of a sufficiently good character.