How to get a personal loan when you have a bad credit score

How to get a personal loan when you have a bad credit score

Having a bad credit score is not good for your financial life but it defiantly does not mean the end of it. With a bad credit your risk multiple things, you can gall into a huge debt and also incur major interest rates on your existing loans.

True, it might be impossible to get large loans from banks and other financial institutions but you can make your way around that. The following alternatives will help you get personal loans even when you have a negative credit score.

Get a co-signer

When you have a negative credit score, it will be difficult to get approved for a loan from any lender. What do you do when you cannot get a loan from your family and friends?  The best solution is to get someone with a high credit score to co-sign you on their credit card.

 Their credit scores can come in handy when you need to borrow a large sum of money from a lender. As long as you clear the loan repayments on time, using their credit scores will not have any implications on their credit history.  If you fail to make the payments, both you and the co-signer will face major financial consequences.

Peer to peer lending

Peer to peer lending is a great online service for people who have a poor credit score. The loans are borrower friendly and have lower interest rates compared to other types of loans. The lenders post their loan rates online and clients contact them to show they are interested in acquiring them. You are required to indicate the exact amount of credit you need and your intensions with the money. Lenders will pick you when they feel you are an appropriate client.

 Home equity loans

This is a great deal for homeowners who are looking for capital to start a small business or a down payment to purchase real estate property.  Your home accumulates equity every year as long as you keep making payments on the mortgage. Using it for a loan is easy, and it will happen regardless of your credit score.  The mortgage payments you make on the home will allow you to get a low interest rate on the next loan you get through equity. Keep in mind that if you do not clear the loan payments on time, the lender has the right to seize the property.

Credit union loans

Credit union loans are attached to your employer, community, or family and friends. If you have an income and good character it is easy to qualify for a loan from your credit union form work. Most credit unions tend to overlook a negative credit history when approving a loan application. The interest rates on credit union loans are lower than that of normal bank loans. You can take out a loan as long as you can afford to clear the payments off your income.

Final word

Getting a loan with a bad credit is not easy but it is also not impossible. Maintaining a good payment on your next loan will help you improve the credit score which means you can qualify for better loans in the future.

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