If you’ve got a low credit score, whether through never having taken out any credit before or financial problems, all hope is not lost. There are still ways to gain access to loans and finance. Although it is more difficult to get a loan when you have a bad credit score, you may be surprised to find that you do have a few choices available to you. In this article, we’ll take a look at these options so that you can make the best decision for your needs.
Peer to Peer Lending
Traditionally, when you chose to take out a loan, you would have to borrow from some form of institution. However, since 2005, peer to peer lending has given people the opportunity to get a loan from an individual. Peer to Peer loans can be obtained online, and they tend to have lower interest rates than other forms of lending. You simply need to post a listing explaining what you want to borrow and why. Investors will then review the listings and decide whether they want to loan to you or not. Whilst this isn’t a failsafe option, you may find a lender who is sympathetic to your needs and willing to help.
Some loan companies will be happy to give you a loan if you have a guarantor with good credit sign on your behalf. In cases like this, the guarantor will be held responsible for paying back the loan if you are unable to do so yourself. Just remember that you are putting your guarantor in a precarious position, and if you fail to honour the agreement it will be marked on both of your credit reports.
Ask Family or Friends
If you have any family or friends who could lend you some money this is another option, and may also be available without interest. If you do decide to go down this route, though, it’s important to treat it like a legally binding document. You may even want to draw up a contract containing the repayment terms. Money loaned between friends can cause problems, so make sure that you both know what is expected of you before any money exchanges hands.
Bad Credit Credit Card
Finally, you also have the option of taking out a bad credit credit card. These are especially designed for people with bad credit, and so long as you haven’t filed for bankruptcy, you should have a few options available to you. Be aware, though, bad credit credit cards often have high interest rates, so you need to ensure that you can pay the balance back in full before it is due. You also won’t be given a very high spending limit until you have shown the credit card company that you are financially responsible.
Whilst getting a loan with bad credit is not exactly easy, there are options available to you. Take the time to look into each of these before making a decision.