If you have bad credit, many financial institutions will turn down the request for a loan because you are seen as a high-risk party. However, this should not kill your dream for getting the money you want. The following are top four options that you can use to get loans with bad credit.
(i) Use a credit union to get a loan
Credit unions operate in the same way to banks but are run on a not-for-profit basis. If you are a member, they will be willing to advance to you loans even if you have bad credit because their fabric binds you. By being a member, the risk is spread out to the entire institution so that every member can address the problem he/she is having. The unions are also lenient on repayment and interests are very low.
(ii) Go for secured loans
Even if banks do not want to advance credit to you, they will never turn you away if going for a secured application. With secured loans, the borrower provides collateral to help lower the risk of the lender. Among the top collaterals you can take to the bank include car log book, home ownership documents, or even business. It is important to discuss the loan with the lender to get value for it. With secured loans, the interest is usually low and repayment spread over a long period.
(iii) Use peer-to-peer lending
Peer-to-peer lending is a method of borrowing from friends that was established in 2005 and is gaining a lot of popularity. Though credit score will still factor in this case, the lenders are more lenient and will provide you with credit as far as you can demonstrate the capability for repayment.
(iv) Borrow from relatives
If you are still getting it difficult to secure a loan, consider asking a close friend such as uncle, husband, wife, uncle or other relatives. Present them with a clear payment plan such as end month salary.
Work hard to improve your credit score
The problem you experienced trying to get a loan is likely to be replicated in other related financial areas. Therefore, it is advisable to start working on improving the credit score immediately. Check and correct mistakes on your credit report, make payment to your previous loans on time, and keep growing other lines of revenue. You should also stay healthy at all times by acquiring entry-level bikes and riding every day or attending your favorite gym.