Some people are unlucky to have bad credit and unable to get loan easily. People with bad credit or no credit are a risk to lend money. Especially banks do not usually lend to bad creditors as they are irresponsible on making late payments of loan or defaulters.
But it is not impossible to get personal loans for bad credit from other sources. Fortunately some lenders think differently and consider other things, your monthly income, current debt amount and your ability to repay before the approval of your loan application. The high interest rate means that you will have to pay more than the consumer with good credit score. Beware of agreeing on payday loan or cash advance. Many lenders online or on the street may offer you loans with bad credit. But they offer very high APR and trap bad credit borrowers. Do not rush and search for other loan options.
There is always chance of building your bad credit score so that you can get loan easily on low interest rates on more favorable terms .It is always advised to check your credit score from the credit bureaus, where your credit score is updated every 12 months.
There are different ways to make your credit better and you can use alternative lending options for this purpose.
Bad credit loans
You can easily apply for loan through this loan search service, which deals mostly consumers with bad credit history. They are in this market for so many years, to serve people with bad credit.
You can always opt for secured loan if unable to get one with bad credit. You can offer a property or a car, your asset, as collateral. Collateral makes your loan application more favorable and helps in approval of your loan. If you are unable to pay back loan, your loan lender have the right to take possession of the collateral, to cover their losses. Just make sure not to agree on short-term loan, you may lose your collateral if you default.
Get a co-signer
You will be lucky to find a co-signer. A person with bad credit can get loan with the help of a co-signer. With a co-signer, the interest rate is fixed, calculated with the co-signer’s credit score. So the credit score of co-signer should be high and he can trust you with the pay back of loan. Otherwise if you default on loan, the co-signer will suffer also.
Another way to get loan for bad credit is through credit unions. You have to become its member, so it takes time to complete the process and receive the loan. The credit union can help to rebuild your credit for future lending. Their priority is not your credit score but they look where you live, working and schooling done. They offer you loans with low interest rates for short- terms to improve your credit.
Family and friends
You can use the option of getting loan from family and friends where you can qualify easily. They may lend you money with no or less interest. But if you are late or fail to pay back loan the relationship between your family and friend may suffer.
You should compare all the lending options before choosing one and work towards building and making your credit score better. It will give more options for further financing.