Even if you have poor credit, getting a loan isn’t out of the question. These five options—from a home equity line to appealing to a co-signer—can help you out big time. Keep reading for more great tips.
“I have balances on 3 credit cards that each charge over 25%. I want to get a loan with a lower interest rate to pay off the cards, but my bank turned me down because of my credit. Is it possible to find a loan that would help me save money even with a low credit score?”
5 Ways to Get a Loan with Bad Credit
If you had the wind knocked out of your credit scores due to financial problems, or because you’re struggling to build credit for the first time, it can be difficult to get a loan. Additionally, with recent changes to credit reports, it’s important that you understand what factors affect your credit and how to build it. You might be surprised that you have more options than you think. I’ll give you 5 ways to find a good loan even with bad credit.
How to Get a Loan with Bad Credit
Having no credit or poor credit is a major stumbling block to getting a loan because you’re viewed as a high risk customer who might default and leave the lender holding a bag of worms. It’s just a fact that until you raise your credit score, you won’t fit the standard lending guidelines that traditional, big banks have to follow.
If you’ve been turned down for a loan or don’t want to get stuck paying high, subprime interest rates, here are 5 alternatives to consider:
Option #1: Use a Home Equity Line of Credit
If you have enough equity in your property, you could get a low-interest, tax-deductible line of credit to spend any way you like.
Of course tapping your home equity puts your property in jeopardy if you can’t repay the debt. But if you have reliable income and are disciplined about paying down an equity line, it’s an inexpensive option, regardless of your credit score.
Compare loans from several institutions so you know you’re getting the lowest interest rate possible before you sign the final paperwork.
Option #2: Apply to Credit Unions
Credit unions are similar to banks but are owned by their members, who typically have something in common—like working in the same industry or living in the same geographic area. Credit unions are nonprofit organizations that pass along earnings to members in the form of lower fees and higher customer service.
Visit findacreditunion.com to locate a credit union near you and give them a call to discuss getting a personal loan. Compare loans from several institutions so you know you’re getting the lowest interest rate possible before you sign the final paperwork.
Option #3: Get a Peer to Peer Loan
Peer to peer or P2P lending has been around since 2005. It’s an online platform that allows you to borrow directly from an individual instead of from an institution. Peer to peer lending is growing in popularity because it’s a streamlined process that’s a win-win for borrowers who pay low interest rates and investors who earn high interest rates. Right now, you can borrow for as little as 6% and earn an average return in the double digits—that’s pretty impressive.
Borrowers post a loan listing that includes the amount they want and why they want it. Investors review loan listings and choose the ones that meet their criteria. Peer to peer lenders screen all applicants and check your credit, which becomes part of your loan listing. So while your credit score is still a factor, an individual investor may be more empathetic to your situation than a traditional bank.
TAG: Bad Credit Loans, Loans, Loans for bad credit, Payday Loans, Business Loans, Quick Loans