There is a common misconception that people with poor credit cannot get a loan. Although it is much more difficult to get a loan if you have bad credit, it’s not entirely impossible. You just need to know where to go and what types of loans to apply for.
There are also some tactics that could improve your chances of getting approved for your loan application despite having a bad credit. Some solutions require you to pay more on interest or give something as collateral while others don’t. However, there is still hope for those with less than stellar credit out there. Here are some tips that will allow you to secure funds even if you have poor credit.
Look for Lenders Who Specifically Offer Loans for Bad Credit
There are some lenders who understand the difficulties faced by people with poor credit scores and offer loans specifically for them. They offer many types of loans with different terms depending on your income and ability to pay. They understand that it’s possible for people to encounter some credit issues but that doesn’t necessarily determine their ability to repay their loans today. You might have been unemployed or encountered temporary health conditions that impact your ability to repay your debts previously.
Direct lenders such have specially-designed unsecured loans targeting people with bad credit, that wouldn’t necessarily get a loan otherwise. One example can be seen through Everyday Loans who even use Soft Searching Technology so that it won’t go against your credit file if you’re unsuccessful in applying for a loan. These lenders will take into account some factors such as your employment status, your age, your income and a variety of other factors to consider you for loan approval. So as long as you are employed and have a stable flow of income, these lenders won’t give you much trouble in granting bad credit loans.
Consider Peer-to-Peer Loans
People with bad credit also have the option to borrow through peer-to-peer lending platforms. Peer-to-peer lending, as the name suggests, involves borrowing money from another individual as opposed to an institution.
Through peer-to-peer lending platforms, borrowers can post a listing that explains the amount required and the purpose of the loan. Investors will review the listings to choose ones that fit their criteria. Although these lenders will still check your credit score while screening you, there’s a good chance you can appeal to the empathetic side of an individual lender as compared to a financial institution.
Use Your Assets as Equity
If you’re not specifically looking for unsecured loans, you can also use your property or assets as equity. This could either be your home or your car. So even if you’re unable to repay the loan for any reason, they can use the investment that you put up as collateral to recover the loan. You can find hard money lenders in your area who typically provide loans without looking at the credit score of an individual, and based on the collateral options instead. However, this process can come with its pros and cons. Pros can include a quick loan, flexible repayment schedule, and that it is accessible to people with a poor credit score. The disadvantage for you in this scenario is that you could end up losing your property or assets if you default on the loan. It’s best to use this as a last resort and only opt for it if you’re desperately in need of the money and you’re absolutely certain that you can repay the loan on time.
These are some of the best options you have if you’re in need of a loan and you have bad credit. Of course, if none of these options work you can always ask a friend or a relative for the loan. If you consider this option, make sure you clearly document the transaction and treat it as a serious business. You should clearly document details such as the loan amount, interest rate, payment terms, etc. to avoid any type of complication.