In today’s economic environment it is harder than ever to get a bad credit loan. Many have suffered from financial hardship, and many credit scores have been damaged. The worst part is that there are a lot of scams out their looking to take advantage of people who need help. Here we will explore some ways to get a loan even if you have bad credit. We will also show you how to spot a scam artist.
Home Equity Loan
If you own a home or are paying a mortgage a home equity loan might be your best bet. You can borrow against the value of your home or against the payments (equity) you have made towards your mortgage. Having a steady income makes the approval process even easier. Home equity loans can be obtained through most large banks as well as other general lending institutions. Remember, you house is the collateral against the loan so if you can’t make the payments you could risk losing your property.
Borrow from a credit union
A credit union is similar to a bank, but the owners are the credit union members. They are often made up of persons who live in the same area or all work in the same field or industry. Their lending practices are more flexible than regular banks, and credit unions might be more willing to look at you on a case-by-case basis. The big banks on the other hand mostly use computerized algorithms making bad credit loans very hard to get approved.
Ask a personal contact
Borrowing from family or friends might be uncomfortable, but it doesn’t have to be. This is always an important option to consider if you have bad credit. Approach the issue as if you are borrowing from an institution. Write up a borrowing contract and set up terms agreeable to both parties. You can find borrowing contract examples on the internet. Make the loan process as professional as possible.
Ask someone to co-sign for you
If you go to a bank to get a loan and you have bad credit you are most likely not going to get approved. But if you get someone who has good credit to co-sign for you your chances improve dramatically. Again, it might be uncomfortable, but a friend or family member might see this as a more secure option because the bank handles all the details and does the actual lending. This option might also be best for the borrower as it makes you feel more accountable when borrowing from a bank instead of a person.
Beware of scams
There are many online services that offer loans for people with bad credit. Beware because many are scams. Never pay an upfront fee or “security deposit”. In these cases you will most likely loose your money.