When it comes to private credit, it may be even more important to use a credit agreement. To the IRS, money exchanged between family members can look like either gifts or loans for tax purposes. Once the agreement is approved, the lender should pay the funds to the borrower. The borrower is held in accordance with the signed agreement, with all the penalties or sentences pronounced against him if the funds are not fully repaid. The lower your creditworthiness, the higher the annual effective annual rate of charge (note: you want a low effective annual interest rate) for a loan, and this is usually the case for online lenders and banks. You shouldn`t have a problem getting personal credit with bad credit, as many online providers cater to this demographic, but it will be difficult to repay the loan, since you repay double or triple the principal of the loan if all is said and done. Payday loans are a very common private loan for people who have bad credit, because all you need to prove is proof of employment. The lender will then give you an advance and your next paycheck will pay the loan plus a large portion of the interest. A person or business can use a credit agreement to set terms such as an amortization table with interest (if any) or the monthly payment of a loan.