Borrowing money when you have a bad credit score or no credit score can be a frustrating experience. Traditional lending sources may seem closed to you. However, there are still many ways you can borrow money, regardless of your credit score. Today, we will go through some of these methods and compare the pros and cons of each one.
First, consider getting someone to cosign on your loan. Even if your own credit score is bad, you may still be able to qualify for a loan if you can find a family member or a friend who understands your situation and is willing to vouch for the repayment of the loan if for whatever reason you can not pay up.
Even if you can not qualify for a bank loan, you may be able to qualify for a personal loan. Personal loans usually have softer requirements than bank loans. They may not require a high credit score. Many of them are unsecured, meaning they do not even require you to put any collateral on the line.
Peer to peer lending is another option. There are many peer-to-peer lending services online. There are also cash advances online where you can go to get your loan. Payday loans and cash advances are ways to get cash quickly when you really need it, but keep in mind that they usually have really high-interest rates and weigh that in mind when considering them. Many personal loans, on the other hand, do not have extremely high-interest rates, and you can shop around until you find one that you like.
Another idea is to go to your family members or friends themselves for a loan. Generally, it is not a good idea to take out loans from family members or friends, as it could lead to some uncomfortable situations down the road if you are unable to pay and they are uncomfortable about pressing the issue so as to avoid ruining your relationship. However, if it is an emergency, this is still an option.
Credit unions are also possible sources of loans. Credit unions are like small banks, but they are owned by members instead of shareholders. You must be a member of a credit union in order to qualify for a loan. However, you may still be accepted as a member even if your credit score is bad. They will look at a whole range of factors when considering your application, including your job and your current financial decisions.
If you have a bad credit score, consider taking out a loan that is secured. If you secure collateral in exchange for payment of the loan, you may find yourself approved by additional lenders.
Your home equity is one possible way to secure your loan. Your home equity is the value of your home minus the mortgage you still owe on it. If the value of your home is $200,000 and you still owe $100,000 on your mortgage, then your home equity value is going to be $100,000. The same idea also applies to your car.
If you are expecting a tax refund, then you may be able to get a refund anticipation loan. They usually come with high-interest rates, but the good part is that they may only use your anticipated tax return as the collateral. However, if you are entitled to a tax refund, you may be able to simply get your refund right away by filing online.