5 Tips On How To Get A Loan With Bad Credit

If you have had financial difficulties recently and have bad credit, it may be hard for you to obtain a loan. However, there might be more options available to you than you think.

Having poor credit can be a major stumbling block to obtaining a loan since lenders consider you to be a high risk customer who could potentially default on a loan. Here are 5 options for you to consider if you have less than an ideal credit history but need to find out how to get a loan with bad credit to help your business survive and thrive.

Even if you struggle with your credit score, you do have options when it comes to getting that much needed loan!

Apply For A Home Equity Line Of Credit

If you have some equity in your house, it may be possible for you to get a low interest line of credit for spending any way you would like to.

Drawing on your home equity of course puts your home at risk if you are unable to repay the debt. However, if you have a steady income and are prepared to pay off your equity line, this is an inexpensive option to consider, no matter what your credit score is. However, if you are wondering how to qualify with for a loan with bad credit, the home equity line is one of the most likely options to work.

Compare loans offered by several different lenders so that you will know you are getting the lowest interest rate before signing for the line of credit.

Apply For Loans Through Credit Unions

Credit unions offer loans just like banks do. However, they are owned by their members. They are nonprofit organizations where earnings are passed along to members through providing them with higher customer service and lower fees.

Contact several credit unions about getting a loan. Compare the loans that are being offered by several credit unions to ensure that you get the lowest possible interest rate.

Apply For Peer To Peer Loans

There are online platforms that enable you to borrow from an individual directly instead of from a lending institution. Peer to peer lending continues to grow in popularity due to its streamlined process that allows investors to earn relatively high interest rates and borrowers to pay on interest rates that are lower than from traditional lending institutions.

To apply for this type of loan, you post a loan listing which includes how much you want to borrow and the reason why you are borrowing the money. The loan listings are reviewed by investors and they select the ones they are interested in. All applicants are screened by peer to peer lenders and your credit will be checked. So although your credit score still is taken into consideration, some individual investors might be more sympathetic to your circumstance compared to traditional lenders.

When every other options fails, peer to peer lending is often one of the best ways to figure out how to get a loan with bad credit.

Borrow Money From Friends Or Family

Although this should be one of your last resorts, you might be able to convince a friend or family member to loan money to you. If you do this, make sure that a loan from somebody you know is treated like a real business transaction that is documented clearly.

In order to avoid any future complications, make a written agreement that include payment terms, interest rate, any collateral for the loan, as well as what will happen if you do not repay your debt.

The bottom line here is that borrowing money from a friend or family member should benefit everyone who is involved in it, and it really should be the last resort. The last thing you want to do is risk ruining a close relationship due to you not being able to repay your loan.

Get A Co-Signer

If you don’t happen to have a family member or friend who is willing to loan you money, maybe someone you know with good credit might be willing to be a co-signer on a loan for you. If you know of anyone who is aware of what your situation is and trusts that you will be able to repay your loan, then they probably will be willing to take the chance.

Just keep in mind that if you end up not repaying the debt that the creditor can go after your co-signer to pay the full payment. Also, all payment history gets recorded on you as well as your co-signor’s credit reports. This could be very detrimental on a co-signer if you end up defaulting or making late payments.

In Conclusion

Next time you heard someone ask: “How can I get a loan with really bad credit?” direct them over to this article. While it can be hard to track down a lender willing to work someone with questionable credit history, there’s no question that there are options out there for individuals and businesses who are willing to do the extra research to find a source.

Learning how to get a loan with bad credit is a skill that could help out tens of thousands of people. There are many different reasons why you might need funding at some point and past mistakes shouldn’t prevent you from getting loans to build a better future.