5 ways to get a loan with Bad Credit
Having no or bad credit can hold you back and prevent you from getting approved for a loan. Your bad credit makes you a high-risk borrower. As you already know, lenders put a lot of weight on and rely on credit scores to determine if a borrower qualifies and the rates at which the risk of lending will be an acceptable risk.
To understand how your creditscoreeffectsyour loan options, it’s best to start by getting your hands on a current copy of your credit report. There are several websitesthat provide you a copy of your credit report online for free. The one I personally prefer and use is www.annualcreditreport.com, you may also be able to get a copy from your credit card provider. You need a copy of your report to review the accounts that are currently reporting under your name and their accuracy. If you notice any discrepancies such higher balances, higher minimum payments and accounts that are closed, call that lender and the credit bureau that is reporting it immediately. All these factors may have an adverse effect on determining your risk factor as a borrower.
Avoid common mistakes that lead to bad credit;
- Making multiple late payments. A 1×30 (30 day late mark) is not nearly as bad a 2×30 on your report.
- Only making minimum payments instead of paying down your balance when you can.
- All payments are important. In today’s digital world, all accounts are somehow connected.
If you’ve made some of the above mentioned mistakes, you can still qualify for a loan. Specially, if the loan will put you in a better financial situation.
There are at least 5 ways to receive a loan without having a perfect credit.
- 1. Apply to Credit Unions
Credit Unions are similar to banks, but they are owned by their members instead of profit-seeking shareholders. A credit union, especiallyif it’s affiliated with your employer or a community-based one, candecide to grant you a loan basedon your character and your abilityto repay it, despite your poor credit history.
- 2. Reach out to family and friends
Even though borrowing from family and friends is never a good idea, you can still consider it if you are 100% positive you can repay the loan and you are going to use the money to put in a better financial situation. Look at it as bridge loan till you get back on your feet. If you do decide to go this route, be sure to have a written agreement with interest rate, loan amount, payment terms and all the other factors you deem important to both parties.
- 3. Get a co-signer
Asking a friend or family member to co-sign a loan is a great option. Not only will their good credit help you qualify at a better rate than you would get with your bad credit; it will also help you rebuild your credit if you make all your payments on time.
Don’t forget the loan is tied to both your credits. Thus, if you miss a payment, you will ruin your co-signers credit and adversely affect someone who was kind enough to help you when you needed it.
- 4. Turn to Personal Loan Lenders
Personal Loan Lenders such as the ones Getmoney.com works with have created a fairly new industry which makes it possible for people with bad credit to be matched with a lender who’s guidelines they meet.
Some personal loan lenders do everything online and get you qualified in as fast as a few minutes and get you the cash you need within 24 to 48 hours.Usually, the applicationprocess is simplified andvery easy. Their qualification guidelines are not limited to your credit history, they use algorithms and other data to access risk.
- 5. If there is no other way, consider Secured Loan
If your credit score is not good enough to meet any lenders guidelines, the best chance of getting a loan is by applying for a secured loan. A secured loan is a loan granted based on a tangible asset you own.
The lender holds the asset as a collateral and will liquidate it if you should fail to meet your financial obligations. Usually, secured loans have lower interest rates and better terms. Plus, if paid in a timely fashion, they can also positively affectyour credit score.
If you do decide to apply for a personal loan, make sure you know think long and hard before you do. If you default, you will lose the collateralized asset.