Are you trying to figure out how to get a loan even if your credit score is poor? If yes, then check out these ways to get a loan with bad credit.
Lots of Americans are struggling with bad credit scores. This is especially true of over 50 percent of Millennials.
Whether you’re a millennial or not, is bad credit holding you back and making it hard for you to get a loan? If so, you’ve come to the right place. Read on to learn seven ways to get a loan with bad credit.
- Know Where You Stand
You might know that your credit is less-than-stellar. You might also be afraid to look and see what your current score is, though.
It’s understandable to feel this way. However, if you don’t take the time to check your score and find out where you stand, it’ll be much harder for you to raise your credit score and every qualify for the loans you’re seeking.
Check your credit score today and request a copy of your credit report. Sometimes, errors on your report (such as incorrect or old information) can lower your score. Getting those errors fixed will give you a boost and get you motivated to continue improving your financial situation.
- Talk to Your Bank
If you have a low credit score and apply for a loan online, there’s a good chance you’re not going to get approved. If you go and talk to someone from your bank or credit union in person, though, you might be able to strike a deal.
Meeting with someone from the bank or credit union gives you a chance to tell your story and explain why you’re in this situation. It also presents more opportunities for you to show how you’ll pay back the money and why you’re a trustworthy person who deserves to have their application approved.
When they talk to you face to face, the folks at the bank might be more willing to make a deal with you. They can come up with a loan agreement that gives you the money you need and also protects them.
- Borrow from Friends or Family
Do you have a friend or family member who’s willing to loan you money? Sometimes, if you can’t get a loan in the traditional way, others will step in and help you out.
It can definitely be awkward to ask those who are closest to you for money. Depending on why you need a loan, though, and what your history is with them, they might be willing to help you out.
If you do borrow money from friends or family, make sure to let them know you intend to pay them back. Sit down and come up with a repayment plan that works for them and for you. Be sure to let them know how appreciative you are, too.
- Get a Cosigner
Your friends and family members might not be able or willing to give you money outright. They might be willing to cosign a loan, though.
A cosigner is someone who does have a high (or at least higher than yours) credit score. They agree to take on the debt and pay back the loan in the event that you default.
This is a big responsibility, and it can be hard to convince people to take it on. If you can prove to them that you have a plan to pay back the money, though, and have no intention of defaulting, you might be able to get someone to help you out.
- Apply for Bad Credit Loans
There are loans out there designed for people who have bad credit scores. Aptly named bad credit loans, these loans have higher-than-average interest rates and often have shorter and more stringent repayment terms. Some lenders specialize in bad credit loans.
Do some research before you start filling out loan applications (remember, applying for too many loans at once will lower your credit score) and look for lenders near you that offer them. Then, compare interest rates and terms to see which one will give you the best deal.
Sometimes, taking on a bad credit loan is the best strategy, even if the interest rate is high. Over time, once you start proving that you can pay the loan back on time, you might be able to refinance it and secure lower rates, too.
- Try an Alternative Loan
In addition to traditional bank or credit union loans, you might also want to look into alternative loans. This includes things like peer-to-peer lending and payday loans.
Peer-to-peer lending sites allow you to borrow money from individual lenders, rather than those affiliated with a bank or credit union. These lenders might be more flexible with interest rates and repayment terms once they understand your situation.
Payday loans are loans with very high interest rates. They’re meant to be paid back quickly (often within 2-4 weeks) and are for relatively low amounts. If you just need a bit of money to tide you over until you get paid or receive a bonus, this can be a good option.
- Improve Your Credit Score
If you’re having a hard time securing bad credit loans or making any of the other options listed above work for you, you may need to wait before you apply for a loan. Instead, dedicate that time to building up your credit score.
Make sure you’re paying your bills on time, and consider taking on a side job to pay down your debts faster. This will help you raise your credit score and make you eligible for more (and better) loan options.
Try These Ways to Get a Loan with Bad Credit Today
You don’t have to let a bad credit score hold you back. If you keep these ways to get a loan with bad credit in mind, you’ll have a much easier time securing a loan that provides you with the money you need right now and gives you an opportunity to build up your score by paying it back on time.
Do you want to learn more about managing your money and raising your credit score? If so, check out some of our other finance-related articles today to get in the know!