When you have bad credit it may be very difficult for you to get loans from banks and other financial institutions. This because they believe that giving you a loan is a great risk due to your previous defaulting history. However, that does not mean that you cannot get a loan with bad credit. The definition of poor credit score may differ from one lender to another. The best thing to do is to apply for a loan to several lenders and you may be lucky to find one who can lend you. If no one can lend you, you can opt for loans with a guarantor which are the most common for people with bad debts.
Ways to get a loan with bad credit
With these loans, you find someone who is above twenty-five years to be the security for your loan. With guarantors, your credit score increases since if you do not pay the loan, your guarantor is held responsible.Read more.
Through credit unions.
Credit unions are organizations which are non-profitable and have members that have something in common. You can join a credit union whereby you offer your services to them which will, in turn, increase your credit score. Compare different credit unions and join the one which is most favourable to you.
Applying peer to peer loans.
Peer to peer loans have been of great help in the previous years to people with bad credit score. They are found online. These are loans given by individuals to other people. If you want a loan, all you have to do is post online and the borrowers come and view then you are given a loan. This came into place to help borrowers who are very desperate to get a loan. Individuals can be empathetic than big institutions.
Putting up collateral.
This is whereby you pledge something of value so that a lending institution can be able to give you a loan despite your bad credit score. Collateral is always something of value so if you do not pay, they will sell it.
Through online lenders.
These days there are many online lenders who do not have strict rules like the traditional big lending institutions. Their credit terms may also be favourable. You have to go to the internet to find them or download certain applications. However, you should be careful to avoid payday loans since they can land you in more trouble.
From friends and family members.
When you have no other option but really need a loan, you can turn to family and friends. This is because they are the people that understand you most and will be willing to help you even with your bad credit score. You have to treat the transaction and agreement as a very formal issue. You can even document it to avoid misunderstandings.
Guarantor loans are not the only option if you have a bad credit score. There are a lot more options which you can consider before you give up on having any loans.