Did you know that about 68 million people with a credit history have a poor credit score?
If you fall into this number, you might think it’s impossible to borrow money with a poor credit score.
Although it might seem like there are not many options for you, there are ways to borrow money with bad credit.
Read on for everything you need to know.
What Is a Bad Credit Score?
Before you decide you need a bad credit loan, you need to ensure you actually have bad credit.
What is considered bad credit? For example, credit scores are measured on a 300 to 850 scale. The higher your score is the more attractive a person is a to a lender.
For some lenders, even a score of 650 can turn off some lenders. If your credit is below this number, you are considered high risk for lenders.
If you don’t know where your credit falls on the scale, this can help you get an idea:
- 760-850: Excellent
- 700-759: Very Good
- 660-699: Fair
- 620-659: Poor
- Under 620: Extremely poor
In order to find out what your credit score is, you can request a free copy of your credit report.
What Is Considered a Bad Credit Loan?
According to the Personal Loan Lenders there are plenty of loans
and lenders out there but if you have bad credit, you might be limited to a bad credit loan.
When you find yourself in a financial emergency, a bad credit loan can be the solution. Bad credit loans are similar to personal loans and you pay them back in equal installments.
If you don’t want to resort to a personal loan with high interest there are a few other options we can discuss below.
It’s Time to Rebuild Your Credit
The first step to getting a loan if you have bad credit is to try to build it up. If you have the time, it might be worth trying to rebuild your credit before you apply for payday loans online.
In order to rebuild your credit, you should try to reduce your older debts, pay your bills on time, and fix any delinquent accounts.
Shop Around for Bad Credit Loan Quotes
If you’re having financial issues and cannot wait to rebuild your credit, you might have to shop around for quotes.
There are many places that cater to people looking for a loan with bad credit. For example, places such as OppLoans, offer quotes for people that have a credit score lower than 600.
They offer loans from $500 to $4000 and you can pay them back in up to 24 months. Of course, you can also look for personal loans without a credit check if you’re worried about your credit score.
Ask Someone to Cosign a Loan
We know taking out a personal loan when you have bad credit might seem like a good idea. However, when you’re having a financial emergency, the interests sometimes are too high.
If the interests of a personal loan are too high, you can always try to get a reliable co-signer with good credit to cosign for you. Because they will be responsible if you default on the loan, you must make sure you make all of the payments.
Banks are more likely to take the risk by giving you a loan if they know a creditworthy cosigner will back it up.
Keep in mind not all banks accept co-signers so you will have to look for a bank who does.
Borrow Money from Family or Close Friends
Another way you can borrow money if you have bad credit is by skipping the banks altogether and get a loan from another source.
If your credit falls in the very poor category, it might be quite difficult to get a loan through a lender.
You might want to start by asking family or friends if they can give you a loan. Of course, they might only be able to loan you money if the amount is not that steep.
It’s important to also be cautious when you borrow money from family or friends because you don’t want to hurt the relationship.
Before you borrow money from a friend or family member, it’s important you agree on the terms of the re-payment.
Once you get an auto loan lender, make sure you keep up with all of your payments so you don’t hurt your relationship.
Get a Secured Loan
Another option when you have bad credit is to get a secured loan. A secured loan will allow you to borrow money but only if you have an asset to offer as collateral.
For example, there are many things you can offer a lender as collateral such as:
- Car title
- Home equity
- Retirement accounts such as 401k or IRA
- Savings account
If you have any other asset of value, you can put it down as collateral to get a secured personal loan.
Write a Letter to the Lender
If you have already been denied by a lender for a personal loan, you can always ask the lender to reconsider.
Sometimes lenders only see your credit report and immediately disqualify you as a worthy borrower. It’s up to you to make your case.
If you were always a responsible borrower but you had financial difficulties because you lost your job, let the lender know.
Write a letter to the lender and ask them to reconsider. Tell them how you can afford to make the payments, your financial situation is more stable, and other reasons you might have.
Stay Clear of Scammers
Lastly, you should watch out for scammers. There are many predatory lenders who try to prey on people with bad credit by offering loans. However, these lenders have extremely high fees and interest rates.
You might not be able to pay them back and be stuck with extremely high fees.
How to Borrow Money with Bad Credit
Now that you know it’s possible to borrow money with bad credit, you can borrow money responsibly.
Start by getting quoted from many lenders, try to get a co-signer, or try to borrow money from friends and family.
You will have a better chance of getting a loan if you find out what your score is and try to rebuild your credit.
For more tips, be sure to visit with us frequently.