It’s not always necessary to have a good credit to be approved for loans. Though having poor credit makes you a high-risk customer to banks, it’s not impossible to get a loan with bad credit. With a low credit score, you are more likely to fall into traps, so a little bit of preparation in necessary to avoid major problems. Here we have discussed about 5 ways to find a good loan even with bad credit.
Apply to Credit unions
Unlike banks Credit Unions may be more willing to give loan to people with poor credit. Owned by its members, Credit Unions are nonprofit organizations that provide loans, credits, saving and other financial services to its members. While banks will only scrutinize your credit score and loan application before approving loan, the Credit Unions have more flexible lending standards. Locate a Credit Union near you and meet them to discuss getting a loan. In order to get loan at the lowest interest rate, compare loans from several institutions before you sign the final paperwork.
Get a Peer to Peer Loan
Peer to peer lending services which has been around since 2005, are another good option to get loan with bad credits. It’s an online platform that allows people to borrow from individuals. Loan seekers can post loan listing that includes the amount they want and why they want on several peer-to-peer websites. Investors review the loan listings and select the ones that they want to fund. The lending standards are more relaxed and interest rates are lower than those offered by traditional lenders.
One of the best ways to get loan with bad credits is through secured loan, in which the borrower pledges some asset such as car, home, stocks, savings or property as collateral for the loan. Secured loans generally offer better terms, and lower interest rates. It can also improve your credit score, if paid off in timely manner. If you default on the loan somehow, there is the risk of losing your asset.
Homeowners with bad credit can easily apply for home equity loan or home equity line of credit (HELOC). The interest rate is usually low traditional loans, because the home serves as the collateral or security. Home equity is tax-deductible and loans can be obtained regardless of your credit score.
Tap Friends & Family
If your credit score is too bad, may be your family members and relatives are the option for you when it comes to getting a loan. If you borrow from your closed ones, do the paperwork properly: pen down the terms and consider using a third party to process payments.
Remember that each loan application that you submit runs an inquiry into your credit and each inquiry lowers your credit score. When you are applying for loan online, be very careful as there is several fraud lenders assuring loans with no credit check to with muddied credit.