If you have bad credit, it’s going to be difficult to get a loan, and the loans that you can get are likely going to have high interest rates. Still, when you need a loan, you need to consider all of your options. Start by checking your credit report to make sure there aren’t any mistakes pulling your score down, then think about these types of loans.
Credit Union Loans
Large banks have certain standards when it comes to approving loan applications. If you don’t meet their income or credit score requirements, there’s no wiggle room to get them to change their decision. However, credit unions are smaller and often take the time to get to know their members. If you belong to a credit union, apply for a loan through them. They may look at you as more of an individual than a set of numbers, and this could mean that they’ll approve you because they can see how your current circumstances don’t necessarily match your bad credit score.
Loan with Collateral
The reason that it’s so hard to get a loan when you have bad credit is that banks worry that you won’t be responsible enough to pay them back. If you don’t make your payments, the lender may have no recourse. However, this isn’t true if you offer some type of collateral. For example, when you get an auto loan, car acts as the collateral. If you default on the loan, the bank will repossess the car and be able to get some of its money back. When you need a loan, ask the bank if there’s anything that could act as collateral to help you get the loan.
Another alternative is to have someone co-sign the loan for you. In this case, you’re the primary person responsible for the payments, but if you fall behind, the lender will turn to the person who co-signed for you. Typically, you could ask a family member or very close friend to co-sign the loan for you, but not everyone is comfortable with this situation. Additionally, the lender will look into the credit history of the person co-signing to ensure that the person would be able to handle your payment if you don’t.
Getting a loan with bad credit can be tough, but it isn’t impossible. You simply have to think of the ways to convince the lenders that you are worthy and able to pay back the loan within a reasonable time frame.