Is it possible to get a loan with a bad credit? Yes, you can still get a loan even if you have a bad credit score. However, it would be difficult to get a good deal. But you still have a few options available, but remember loans are usually more expensive. Also, it’s not impossible to borrow even if you have a bad credit score.
If you are planning to get a loan with a bad credit score, it would be much easier for you to fall into an expensive trap. But with a bit of a preparation, it would help you avoid the worst problems. After you have borrowed wisely and repaying it on time, you can slowly rebuild your credit to make it easier to borrow next time.
What Is a Bad Credit?
It is your credit card history that contains a lot of different problems, this includesif you’ve had a collection of accounts, late payments, bankruptcy records, and more. It’s a bit difficult to assign a specific credit score to a bad category, as different lenders will analyze your credit in various ways, they are also willing to lend to different borrowers.
But still, it is safe to say that having negative items in your credit history would still result in a bad credit. However, lack of credit or a thin credit with a couple of problemswould still lead to a low credit score.
Your credit might not be as bad as you think, but if anyone has told you that your credit can ruin your chance of getting a loan, then you should verify for yourself. It’s true that authentic problems exist, but there might also be a couple of errors on your credit report. And by fixing those identified errors, it may improve your credit considerably.
Understand Your Credit Score
Credit scores are a way to measure the amount you have to repay a loan. The scores range from around 300 to 850 score. The higher your score is, the more likely you’ll repay with a low-interestrate.
A bad credit score will start around 650 and below. If you are in this category, it would be considered as high risk, and you’ll more likely to pay the highest interest rate. Having the lowest score would make you a prime candidate for bad credit loans.
When it comes to the definition of a good and bad credit score, it does differentiate from lender to lender. Some lenders won’t serve anyone with a credit score of under 650 scores, but there are actually some lenders that marketto consumers with a 650 score.
It’s kind of hard to say if you have a good or bad credit scoreboard, but the range kinds of look like this:
- 760 to 850 score – Excellent
- 700 to 759 score – Very Good
- 660 to 699 score – Fair
- 620 to 659 score – Poor
- Scores 620 and below –Extremely Poor
Having a poorcredit or no credit at all is a major downside when getting a loan, this is because lenders view you as a high-riskcustomer who might up and leavesa lender hanging. This is just a fact until you get to raise your credit score, you won’t be eligible for the standard lending guidelines, which is followed by the traditional big banks.
If you have recently been turned down for a loan, or don’t want to get stuck by paying high-interestrates, then here are 5 alternative ways that you can follow:
- Quick Loan Option
If you are in a hurry and badly need toborrow from a lender, then applying for a fast loan online through Quick Loans Direct is your best bet. Unlike most of the traditional loans out there, with a very slow approval process, quick cash loans is prepared with applications and approval process that are quite fast.
It is basically designed to help cope up with your immediate expenses, which demands you to act quickly. Some of the quick loans out there actually marketforthose who have bad credits.
- Apply to a Credit Union
A Credit Union is quite similar to a bank, except for the fact that they are owned by the members, who usually have something in common such as living in the same local area, or working in the same company.
They are a nonprofit organization that passes along their earnings to their membersbut in a form of a lower fee and a higher customer service.
- Get a Loan from Your Family or Friends
If most of the lenders that you have come to have rejected you, then maybe some of your friends or family members will. Talk to them as if you are in a serious business transaction that’s been documented and recorded legally.
And to avoid complications in the future, you can create a written agreement that includes the payment terms, some indirect things that you put up for the loan, interest rate, and what would happen if you fail to repay your debt. You can hire a lawyer to get a promissory note.
- Try Using a Home Equity Line of Credit
If you have enough money investedin your property or vehicle, you might get a low interest and tax deductible line of credit that you can spend any way that you like.
However, messing with your home or vehicle equity might put possession in danger if you can’t repay your debt. But if you are disciplined enough about paying your equity line and if you have a reliable income, it can be a great inexpensive option, regardless whether yourcredit score is good or bad.
- Consider a Peer to Peer Loan (P2P)
The P2P lending has actually been around since 2005. It is an online platform that allows you to directly borrow from an individual, and not from an institution. The P2P lending is actually growing in popularity because of its streamlined processes, which is a win-win situation for borrowers that pay in low-interestrates, despite their credit score, and for the investors who earnhigh-interestrates.
For now, you can borrow from them for as low as 6% and earn double digits in return, which is pretty impressive.
Applying for loans, especially if you have done it the wrong way, can further damage your credit score. Therefore, you should be careful when applying for one, especially if you have a bad credit score. If you want to know more alternatives on how to get a loan with a bad credit, you can visit other sites for more suggestions.