How To Get A Personal Loan With Bad Credit ? – 8 Options To Help
Financial problems are very common in a human’s life. Such are the times when we often want some support. A loan is all you need to begin your new life but if you are someone, who has been turned down from most of the financial institutions then I am sure you must be one among those people with a poor credit. Such are the times when you wonder how to get a personal loan with bad credit. I am giving out some helpful answers to you. Check them out.
But before I list you the tips, let me explain you what bad credit is all about.
What Is A Bad Credit?
To put it in simpler terms, a bad credit is a failure to keep up with all your payments and credit agreements. It literally means that one has not succeeded in making past dues on time or haven’t paid the bills at all. On the other hand, poor credit also occurs when your accounts had been sent to collection agency, filed for bankruptcy, charged higher balances and vehicle is repossessed. A bad credit score is something that makes it extremely hard for a person to acquire a loan and even if you get one, you will be charged high. Moreover, it will silently sabotage some vital life aspects without making you realize it.
Which Credit Score Is Regarded As Bad Or Poor?
A credit score ranges between 300 and 850. A credit score that ranges below 620 is often considered bad or poor. On the other hand, it is significant to make a note that a score below 620 doesn’t means you will not get loan or any financial support at all. It all depends on a lender.
A Credit Score Between 580 & 619
This is neither great nor too bad. It is leaning more of a bad credit but still one is eligible to borrow money from lenders. On the other hand, you might not be too happy with the kind of interest offered to you.
A Credit Score Between 500 & 579
A person falling in this category is often considered to have a poor credit. This is the stage where financial options are limited and even if you get one, the interest rates will be higher.
A Credit Score Between 300 & 499
This is the lowest score one can get with his or her credit. This is the stage where it becomes too hard for a person to find a financial support. A score like this literally means that you are irresponsible with your payments, debts and other things. If you have a score like this, then start improving it right away.
How To Get A Personal Loan With Bad Credit?
Let me be true over here. If you have a poor credit score, then the options left for you to acquire a personal loan is limited. Moreover, borrowing even little cash turns out to be too expensive. However, you aren’t unlucky completely. There are still few options left to help you to be funded. These are some alternatives to check.
1. Apply In A Credit Union
The first place where you need to knock the door at while having a bad credit is none other than “Credit Union”. A credit union works more like a bank. They might be happily willing to give you a personal loan with bad credit. Credit unions aren’t as big as banks but there are chances that they will consider you personally. Even though they carry out responsibilities like banks but members, own them. They are non-profit concerns, which pass on their earnings to other members, who are in need of money. And that too with low interest rate and best customer care support. However, to apply for a loan at a credit union, you require being its member. You can find a credit union near your locality and probably discuss with them for formalities and kind of paperwork to be carried out further.
2. Check Online
Yes, it is hard to find a lender who offers a personal loan for bad credit but it isn’t impossible though. If you know the right sources to look at, even you can get one. Start looking for such lenders with some banks. Or probably where you have your account but if you are turned down, don’t waste much time in looking for other banks. Instead, check online for such available services.
3. Your Home Equity Can Help
This is one of the best answers that I can give to the question — how to get a personal loan with bad credit. A home equity can seriously help you to get a loan with poor credit. In fact, you will be able to get lower rates. On the other hand, let me make you aware that it can put you in risk too. Suppose, you fail in repaying the cash then you will be left without a house. So, think twice before making this move. If you are 100% confident of your monthly income and ability to repay, only then think of tapping up your home equity else don’t even imagine it. Loans on home equity fetch you smaller interest rates for the reason that you are securing the loan with collateral. Moreover, even the interests are tax-deductible. If you are planning to make this move, then find a reputable lender.
4. P2P Lenders
If banks and other financial institutions aren’t working for you then consider going with P2P (Person-To-Person Or Peer-To-Peer) lending. They are one of the best means to get a personal loan with bad credit. With this feature, you will be directly lending from a person instead of an organization. Therefore, there are chances that they might be little sympathetic to you but also note that they will never want to lose what they give. P2P is actually an online base, which is been there since 2005. Since P2P process is streamlined, popularity for this is high these days. Streamlined process is a strategy wherein borrowers pay lower rates & investors earn higher rates. Therefore, it is a win-win strategy for both the parties.
In P2P lending, a borrower has to post about his or her loan details. This includes name, loan amount, when the borrower wants the loan amount, where the borrower wants it and the reason one is borrowing the loan for. After posting it, potential investors then check everything that you have listed for the loan. They review if you meet the required criteria for a loan. This way they screen out all the applicants, check for credit score and then either select or reject. Few sources for P2P lending includes the below:
People Capital
GreenNote
Prosper
Peerform
Lending Club
5. Meet A Lender In Person
Meeting a lender in person rather than applying online is sometimes considered better because the chances of understanding your financial situation are much higher. Hence, consider talking to a lender individually and meet him or her personally. Before meeting, ensure that you have all the necessary documents with you. Ask all these details to the respective official prior meeting. In general, lenders will want to see your loan or application form, credit report, evidences of your income, assets evidences (if you are using collateral) and other supporting documents. Check all the documents properly and make sure that there aren’t any errors. While meeting, present all the documents accordingly and talk impressively but be honest because this is that one quality they look in every borrower.
6. Your Family Or Friend Can Help You
When it comes to how to get a personal loan with bad credit, this tip is something you need to make a note of. If you feel online P2P lenders, bank institutions and credit unions are not worth trying then you may consider asking money from any of your friends or family members. And they are far better than strangers. Consider talking to your closed one and explain your current financial problems. But just because you know them personally, never ever take this for granted. Make all the paperwork and other loan formalities the same way you do with a professional lender. List how much is the loan amount, how much you will be repaying every month, interest rate offered, name of the lender and so on. Every detail has to be clear and right. Make it legal and repay the due on time so that your relationship stays healthy. Otherwise, you end up messing all your personal relations as well.
7. A Co-Signer Can Pull You Out Of Trouble
If you are extremely in need of a personal loan and have almost tried everything but nothing seems working out then consider getting the help of a co-signer. He or she is a person, who has a good credit score and who might be willing to give a guarantee for your loan. Consider getting the help of such a person, who knows all your problems, understands and trusts you that you will repay your loan on time. On the other hand, make a note here. In case, you fail to repay the loan amount on time, then even your cosigner’s credit score is damaged. So think 100 times before you take this move because you will end up spoiling the credit of one, who wanted to help you in your bad times.
8. Utilize Your Collateral
If you are finding it little hard to get a personal loan with that poor credit of yours, then assets (if you own any) can help you at such times. You can utilize them as collateral. But if you fail to repay the loan, you lose your property too. However, there are risks in this but if you are sure about repaying, then this can be a good option.
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