It’s never desirable to be strapped for cash while still weeks away from getting your paycheck, or maybe having an emergency while already on a budget. Getting a loan might be of help, but what if you have a bad credit score?
Worry not, even while having a bad credit score, there are still options for you to work with, albeit it being more expensive or riskier. It’s still a way for you to bridge that gap.
First things first, when thinking of applying for a loan, conduct thorough research. Calculate how much money you need and see if it’s within your ability to repay it.
That being said, here are a few options in getting a loan while having a bad credit score.
Options for Bad Credit Borrowers
Online Lenders – Online lenders generally worry less about you having a bad credit score as they usually offset this by giving you higher interest rates.
Borrowing from friends and family – Although it is a bit riskier from a relationship stand-point. This is one of the best way to get a loan as family and friends don’t usually put you through an arduous process.
Credit Unions – Credit unions are organizations that are owned by the members, and are non-profit organizations. And being a non-profit organization usually means having lower interests. Keep in mind that when loans are taken from a credit union will need to be paid back quickly as you’re taking from the pooled money, and some members would also get loans.
Getting a co-signer – Getting a co-signer will significantly improve your chances of getting approved. The function of a co-signer is if you’re unable to pay for what you borrowed or you default, they will then be the ones to shoulder repayment. Putting them at financial risk and also straining your relationship with the co-signer when things go south.
Offering a collateral – One way of showing the lenders that you are determined to pay what you borrowed is by offering collateral. A collateral needs to have monetary value and once you fail the repayment, the lender or the organization has the right to seize that property and sell it to cover losses.
Personal Loan for Poor Credit Borrowers
Credit scores are a good way for financial institutions and lenders like banks to determine the borrower’s creditworthiness. However, what happens when you have a poor credit? Applying for a personal loan when you have a not so good credit might ruin your chances of getting approved but it isn’t completely impossible. Here’s exactly how you get approved despite a poor credit.
What is a Credit Score?
Almost every individual has his or her own credit file which details a person’s creditworthiness. Your credit score represents and tells how you pay your bills, if you pay on time or if you pay late, if you default on your loans or succeed in paying your debts off. A high credit score gets you access to loans with better terms and conditions. A lower credit score might give you higher interest rates.
How to get approved for a personal loan even with a bad credit?
Visit Your Local Credit Union
Your community-based credit unions are usually always more lenient when it comes to credit scores. When you are a member, they are more inclined to overlook poor or bad credit scores and turn to alternative sources of information such as source of income. As long as you can prove that you can pay off the loan, then you have higher chances of getting in. Best thing about credit unions is the max allowable interest rate is at 18%.
Get a Co-signer or a Guarantor
When applying for a loan, it helps to get someone you have good relationship with to sign as your co-signer. In addition, when looking for a guarantor, make sure the individual is someone with a good credit score as this can increase your chances of getting approved.
Try a Peer to Peer Lending Platforms
P2P platforms tend to be more flexible when it comes to the conditions of the loan. In addition, these platforms help build a direct connection between the borrower and the lender.
Why Choose Unsecured Loans?
Unsecured loans can help you out during the direst situations. If you need cash fast, unsecured loans like payday loans are the right choice for you. It’s fast, convenient, and highly reliable.
Unsecured loans other similar types can be extremely helpful during emergencies. However, most unsecured loans have high-interest rates compared to secured business loans. Loans with high-interest rates can be difficult to deal with. So choose the right deal that’s best for you.
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