Bad credit is a curse that follows you around every time you apply for something. This applies to loans a little too badly than most of us would like. Getting a loan on bad credit isn’t easy, but it is possible. So before you give upon your plans, remember it’s rarely impossible to borrow money at this point in time.
Getting a good deal on it however is a completely different thing. If you borrow wisely and make timely payments on it, you can rebuild your credit so it’s easier for you to borrow next time around.
Low credit scores can make you susceptible to very expensive financial traps, so before you borrow money from your friendly neighborhood drug dealer, have a look at some of these alternatives.
What exactly do I mean when I say bad credit?
If you have a bad credit, it basically means you don’t have a good history with money on paper. This means that in the past you have made too many late payments, gone bankrupt or been involved in bad loans. In any case the important thing to remember is that there is no particular boundary that we can call a bad credit score. These are basically dependent on the person who is evaluating you and their purpose for it. For example, you don’t need to have an excellent credit score to get approved for a store credit card at Walmart, but that same score might be insufficient for getting a major loan at your bank. If you think you won’t get approved for a loan, you can simply check your score yourself. It’s free for people in the United States once per year.
Our first stop, the Internet.
If you don’t have the best credit, online options are one of your main go-to’s. Here is what your online options have to offer:
Your first option is going to peer to peer lenders like Lending Club Myinstantoffer. This means that instead of going through a bank to get a loan, you can just go to an online peer to peer site. This will put you in touch with someone who’s got the money you need and is willing to lend it to you. Convincing people is usually easier than convincing a bank that has a fixed policy, so your odds are better with this option.
You can also look into Market place lenders; this also means non-bank P2P lenders or other such sources. They use various methods to determine whether you’re good for the loan, so your odds of getting approved here relative to a bank are pretty good.
Use collateral.
Having trouble getting approved for a loan? Why not put that thing you worked so hard for at risk?
Yes ladies and gentlemen we’re talking about collateral. If you put something of value up as collateral, lenders have more incentive to lend you money. Not only are they covered in the case that you fail to make your payments. They also know you have added incentive to pay them on time. If you fail to do so, they can take your collateral and sell it to make up for their loss.
Be very careful when putting something up for collateral, especially if it is your house. If you fail to make payments you may be forced out and that is not a situation you want to find yourself in.
The FnF resort.
One of the last resorts we all know we have in the case that our credit score is too bad to get a good deal on loans is the friends and family option. Ask them for some financial aid but make sure that you form some sort of agreement, preferably in black and white beforehand. Having a third party present is also a wise move and can help keep all those involved safe, financially speaking.
You can also ask them to sponsor you for a loan but this requires them to have very good credit scores and also puts their credit at risk in the scenario that you fail to make good on your payments.
Some things you should know.
Here are some of the basic tips to avoid being scammed when you’re already in a bad spot. Try to not pay any fees for loans upfront. That means if someone is charging you money just to apply for the loan, there is a good chance you will not get approved and they get to keep the money. Those loans that approve everybody are also not a wise move. They usually have such high interest rates that the debt keeps building up and makes it very difficult for you to dig yourself out of that hole. Keep all that in mind and you should do fine.
