It’s been a while since my last post.
Here’s my new article – I hope you’ll like it!
It can be very stressful when you’re in need of credit but are struggling with a bad credit score. You’ll
find yourself getting rejected by the banks and large credit card providers and it can feel like you
have no options left.
The good news is that there are still options; you just have to know where to look.
Here are 10 simple ways to get credit, with bad credit:
1) Peer to Peer Loans
P2P borrowing uses the web to connect you with individual lenders rather than big financial
institutions. While some might be as strict as a bank in regards to your credit score, others are much
more lenient and accept those with bad credit. The good news is that interest rates are usually much
lower as well.
With the vast and growing pool of P2P lenders, you are sure to find someone willing to lend (as long
as you’re not asking for too much).
More info in this video:
2) Home Equity
Equity is the portion of your home that you own or more accurately, the percentage of the mortgage
that you have paid off. You can use this to obtain a line of credit (known as a home equity loan),
which will come with low-interest and is also tax-deductible.
Of course, make sure you can afford to repay this credit as your home is at stake if you default.
3) Secured Loans
Lenders may be more willing to lend to those with bad credit if they offer something of value as
collateral. This might be your home or other property, land, an expensive car, business assets, or
high-value items like jewelry.
Should you fail to repay the loan the lender can then take ownership of said property.
Collateral is usually equal to or lower in value than the loan itself.
4) Using a Cosigner
A cosigner is somebody that signs alongside you for the loan or credit and agrees to take on the
obligation if you fail to repay. They will need to have a better credit score than you, as it is their
score that is being taken into account because yours is poor.
A cosigner might be a helpful friend or family member who can’t lend you the money themselves but
trust you not to leave the burden on them.
Still, there is a different opinion on the topic:
5) Credit Unions
The services offered by credit unions are similar to banks, so you can apply for loans, but they are
more likely to approve you because they operate as nonprofits.
A credit union is owned by a group of individuals and any profits are reinvested so members can get
lower fees and interest rates.
Certain credit unions are aimed at certain sectors of society, such as veterans.
6) Payday Loans
Payday loans can be risky due to their high interest rates, however, if you know you can repay the
loan on the agreed upon date (on or just after your next payday), you’re only charged a single
finance fee. If approached properly they can be an important lifeline.
Payday loans tend to approve more people with bad credit than the banks and can be easily
7) Bad Credit Cards
Some credit cards are designed specifically for those with bad credit and who are looking to rebuild
their score. The catch is that you’ll only get a low limit, no perks or rewards, and interest rates are
high – so be sure to pay the full balance off every month.
8) Debt Consolidation Loan
Some loans are designed for those with bad credit, who are struggling to manage all of their
outstanding debts. You borrow enough to pay all of these upfront and then only have one monthly
payment to worry about.
They’re not always tied directly to your other debts, however, so it’s possible to take advantage of
the process and borrow a little extra.
9) Family and Friends
Borrowing from friends and family is often seen as informal, but to demonstrate your seriousness in
repaying them, you can draw up a contract and get it overseen by a lawyer. Like any other loan, the
agreement should include the repayment schedule, any interest and any other terms that apply.
Watch this funny video:
10) Improve Your Credit Score
Of course, the best way to improve your chances of getting credit is to improve your credit score
itself. Borrowing small manageable amounts or taking out something simple like a contract with a
cell phone provider is an easy way to start that process. As you build up trust again, better loan
products and terms will become available.
We hope you found these tips informative and can apply them to give yourself that much needed
financial breathing room. If you have any methods for getting credit with a poor credit score
yourself, be sure to let us know in the comments below!