When you have bad credit, it can feel like the world is conspiring against you to keep you in a cycle of perpetual poverty. Traditional loan options are often no longer available to you. However, there are still borrowing options. You just have to know where to find them. These loans are available to those who have been denied credit in the past based on a bad credit score.
Even with bad credit, you most likely still qualify for a signature loan. A signature loan is a form of personal loan where the borrower does not require collateral or a good credit score; they rely on good faith alone. KingofKash is one example of a signature loan provider.
However, it is worth noting that signature loans often charge a high rate of interest. They should therefore only be taken out in the case of an emergency when you know you can make the repayment on-time, in full. Failure to do so could further damage your credit score.
A Home Equity Line of Credit
While not technically a loan but a line of credit, a home equity line of credit (HELOC) is an option for homeowners with poor or bad credit scores. It gives homeowners a tax-deductible line of credit at a reasonable rate of interest, with no spending restrictions. The catch? They use your house as collateral.
Credit Union Loans
Getting a loan from a credit union instead of a traditional bank is often easier. Credit unions have less stringent credit score requirements, and providing you’re are eligible for union membership, they will likely grant you a loan. There are also fewer penalties and fees incurred by credit unions than traditional lenders.
To become a member, you may need to have a certain profession or live in a certain area. The amount you can borrow depends on your credit score and what type of loan you are requesting.
P2P loans, or peer-to-peer loans, are only a recent entry to the personal loan market. There are a number of p2p sites online which connect borrowers with individual lenders from around the world.
Almost anyone can qualify for a P2P loan, and the interest rates are usually reasonable. However, P2P loans are unsecured and if you can’t find a single borrower who is willing to lend you the money, you may have to borrow from several individuals, each with different interest rates.
P2P loans also take some time to process. This means that the funds can take over two weeks to arrive in your bank account. If this is a problem, you would be better off opting for another loan option.
If you have a family or friend who would be willing to co-sign a loan for you, you would be able to get a much more favorable interest rate and repayment plan. The friend or family member needs to have good credit, and you may have to convince them that you can repay the loan. If you fall behind on repayments, they are responsible for the debt. If they can’t repay it, it will damage their credit score as well as yours.
Borrowing money with a bad credit score is not easy but is possible. Choose one of these loan options and be sure to make payments on time. This is the best way to improve your credit score and open more doors to borrowing in the future.