There will be times throughout your life where you will need to borrow money, buying houses or cars, but a good credit score is a must. Lots of us due to different circumstances find ourselves with poor credit or even worse no credit history at all. That can make getting a loan difficult if not impossible. People with poor credit scores are considered very high risk, having a greater chance of defaulting on the loan. If you don’t do something to improve your credit score you may never get a bank loan.
There are alternatives, however the interest rates can be enormous. Here are some tips for getting a loan with bad credit.
Improve Your Credit Score
First of all you should do everything within your power to improve your credit score. Even a couple of points can be the difference between a yes and a no. Start by pulling your own credit report at all three of the credit reporting agencies. Make sure that all the information they hold is correct, mistakes happen all the time and you need to have them corrected. Pay down some of your existing debts, this will also go a long way in improving your score. Here is a video showing you more ways to improve your credit score.
Home Equity Loans
If you own property and have equity in it, you can get credit using the property as collateral. These loans tend to have lower interest rates and can be tax deductible. However should you default on the loan you run the risk of having the property repossessed. Make sure that you have the ability to repair the loan or you could put your home at risk.
Try a Credit Union
Being turned down by a bank is not the end of the road, you can also try a credit union. They operate very similar to a bank but they are owned by the members. You can get loans through a credit union at a lower interest rate and their credit requirements aren’t as stringent as a typical bank.
This is a fairly new concept but it has grown in popularity over the last decade. There is an online platform that you register for and you can borrow money from individuals rather than a bank or finance company. You must indicate how much you want to borrow and the reason you want to borrow. Potential lenders can check out your profile information and decide whether to grant the loan.
Despite having a low credit score there are ways that you can improve your credit score and secure a loan.