If you’re one of the third of Americans with bad credit, it probably feels like it follows you wherever you go. Whether it be a few financial mistakes from your past or a generally thin credit history, your credit score might seem like an unfair grading system that affects too much of your life.
Regardless of whether or not it’s fair, it’s true that your credit score affects a score of your personal finance options. Whether you’re trying to buy a house or taking out a personal loan for an emergency, your credit score matters.
It’s not the end of the line for you, though. Loans for poor credit exist– it’s just a matter of knowing where to find them.
Sound like you? Keep reading to learn more about potential solutions.
What Types of Loans for Poor Credit Are out There?
Don’t fret– there are a variety of different loans for poor credit. You’ll need to decide which is right for you based on your current assets and needs. Take a moment to think about your position, then dive into reading about all of these options for you.
Home Equity Line of Credit
If you’ve got equity in a home you own, you can take out a line of credit using your home as collateral. The amount of credit available is usually equal to the amount of equity you currently have in your home.
Putting your house on the line is risky, but it’s an option for securing a loan with relatively low interest and relatively low restrictions on how the money’s spent. To qualify, you need at least 20% of equity in the home. This can fluctuate according to the housing market– you might have more equity than you think you do.
There are a few other details that lenders look at, like your debt to income ratio and employment history. If you can prove these, home equity lines of credit are flexible and usually have lower interest rates than credit cards.
In need of some quick cash? There’s a loan for that.
Payday loans exist mainly for those who might encounter an emergency and have no savings. They usually range from a hundred to a thousand dollars, depending on your current income and how frequently your payday falls.
In order to qualify for these loans, you usually only need to show proof of income. The loan will be subject to interest and is usually due back by your next payday.
If you feel confident that you can pay it back by then, this is a great option for those who need cash fast. Just be careful– if you can’t keep up, you’ll go from living paycheck to paycheck to living next paycheck to next paycheck.
Title loans are similar to home equity lines of credit, except using your car as collateral instead of your home. Let’s face it: homeownership isn’t as common as vehicle ownership, and sometimes your collateral just isn’t that bountiful.
Title loans are available for those who own a car where no co-owners are listed on the title. The title can’t have any liens on it, either. If this sounds like you, you might be able to get a title loan.
They’re usually paid back monthly and have high-interest rates. If you rely on your car for transportation to work, it’s risky to take out this sort of loan.
Installment loans are essentially personal loans for poor credit. If your credit score is in the 500’s, your credit score is technically lower than average, but still not as low as it could be. You’re a perfect candidate for installment loans.
Many lenders pay close attention to credit history with these types of loans. They look at your errors: was it a few one time things that brought you down from average? Or do you have a regular habit of late payments?
If you’re just down on your luck, it’s very likely that you’ll score an installment loan with a decent interest rate.
Even if your credit is on the lower side, that’s okay. Some installment loans boast no minimum credit score, making it easier than ever to obtain the cash you need quickly.
Sometimes, federally funded student loans just aren’t enough. Education is expensive in this day and age, and students frequently find themselves needing to turn to private lenders to make up the difference.
With poor credit, many big student lenders won’t approve you for a loan. Are you out of luck?
The answer is no. There are forms of personal installment loans that are geared towards students, offering income caps and quick processing.
They’re also incredibly flexible. Oftentimes, a student needs to take out a loan for living expenses while in school full time. Federal loans give tuition money straight to the school, whereas bad credit student loans go straight into your account.
They’re perfect for giving you that extra boost to help with rent, groceries, and gas while getting your education. And the best part? With extended repayment rates, you’ll be able to build your credit back up slowly but surely.
Which Is Right for Me?
If you thought you had no options, you can see now that that’s not the case. If anything, there are too many loans for poor credit to choose from. Which is right for you?
If you’re considering taking out a loan with poor credit, ask yourself a few questions beforehand.
What are your assets? What are your needs?
What is your capability for repayment at this moment? In the future?
It’s essential to apply for the correct loan for your situation, or you might find yourself in a hole of debt that seems impossible to climb out of.
What’s My Next Step?
Luckily, we can help. We offer instant decisions on bad credit loans, from installment to student– we even offer loans with no credit check. Get in touch today to discuss your needs and options. We’ve got a plan for you.