A bad credit score is a major obstacle in obtaining a loan. You may have been experiencing
financial problems, and resultantly, made late payments. Ultimately, you’re
stuck with a poor credit score. But now you need a loan. Is it impossible to
get a loan with bad credit?
The
answer is no. First, your credit score might not be as bad as you think.
Second, some lenders may still be willing to lend to you. Third, there are
other options as well.
Here
are five alternatives to traditional loans:
1. Home
equity credit
If you own a
home and have equity in your property, you can get a loan. Not just that, you
can get a low-interest, tax deductible loan which you can spend any way you
want.
But keep in mind that choosing this option puts your house in
jeopardy. Do you have a stable job or business? If yes, then you can pay off
the loan in time. Be careful with your money and be extra savvy.
2. Go for the credit unions
A credit
union is owned by its members. They all have something in common. They might
work in the same industry or live in the same area. These credit unions provide
good service with lower charges.
Try to find
a credit union near you. Call them up or meet with them in person. Discuss the
possibility of getting a personal loan. Don’t decide until you’ve compared the
rates of at least a few unions. Go with the one which offers lowest rates and
good services.
3. Peer-to-peer
loan
P2P lending
is an online option to borrow directly from a lender instead of an institution.
Borrowers can get an interest rate as low as 6.5%, while lenders can gain as
much as 10.5%.
The method
is simple. Borrowers post a list of the amount they want and reasons for it.
Lenders choose appropriate borrowers and check their credit. If your reason is
strong enough, then your credit score won’t matter much.
4. Family
and friends
If nothing
else works, you can ask your family or friends to help you. Don’t treat this
loan any different from the one you would have gotten from a bank. In fact, have
an agreement prepared which includes details for loan amount and payments.
5. Ask
for a co-signor
If your
family and friends can’t lend you a loan, you might still ask them to become a
co-signor. Choose a person with a good credit score who trusts you to pay the
loan.
If a loved
one or friend agrees to become a co-signor, be responsible for the payments.
Any late payments will appear on both your credit reports. If you are unable to
pay the loan, the creditor will ask your co-signor for funds.
One of the easy credit repair trick is to keep an eye on your
credit reports. We have a number of resources and credit repair tips on our blog. Begin fixing your
bad credit now!
