Research performed by Analytical Research Cognizance indicates that the number of personal loan accounts in America totaled to 19.5 million in 2018, a 12.5% increase from the previous year.
But what should you do if poor financial decisions lead you to have a low credit score yet you need to take out a loan? The situation leaves you with one question that many other people think of, “What should I do when I need money?”
Getting finance with a bad credit score can be very hard. It is, however, not impossible. Even so, before getting started, there are a few things you should understand:
What Does Having Bad Credit Mean?
Financial institutions can gauge the ability of someone to pay back a loan through credit scores. The higher the credit score number, the higher the possibility of paying back the loan. Anyone with a bad credit score (usually below 650) is consindered high risk.
Thus, you need to understand that even if a credit bureau agreed to offer you a loan, the terms would not be as favorable. Even so, here are four quick options you can use to get a loan if you need money now.
1. Getting a Credit Union Loan for Bad Debt
You can get a loan from a community-based credit union or one that has affiliations to your employer. Such unions may be willing to overlook your poor credit history and agree to give you the money you need based on the promise you make to repay them.
The most intriguing aspect of credit unions is their interest cap rate of 18 percent. It applies to everyone regardless of their credit score.
2. Getting a Co-signer When I Need Money
Another option to getting a loan is contacting anyone with a good credit rating to co-sign for a bad credit loan. When you get a co-signer, the lender bases the terms of the loan on the credit scores of the person that has the excellent credit.
It makes them partially responsible for the repayment of the loan. Since the lender records both you and your co-signer’s credit report, default on the loan puts you both in trouble.
3. Borrowing from Friends and Family
Asking help from friends and family is one of the simplest ways you can try to get funding. However, it is dangerous when you look at it from a relationship standpoint. By not repaying the loan, you can damage long term relationships, which is worse than having a bad credit report.
4. Peer to Peer Lending Websites
It is now easier to get funding online through p2p lending platforms. Here, you post a loan listing on various peer to peer websites where investors can decide whom they want to fund. You can either get a loan from an individual or several people together.
I Need Money!
“What should I do when I need money, and my credit rating is poor?” Such are the questions that financial institutions process daily from their many clients.
It may seem close to impossible to get a financial backing with a tainted credit report. But, by following one of the four listed methods above, you sure with find one way that will work out for you.
If you want to learn more about how you can get financial backing, be sure to contact us or read more information on our blog.
Here are some other articles that you may enjoy:
9 Personal Questions to Ask Before You Take Out a Personal Loan
What Are the Advantages of an Unsecured Credit Card?
How Do I Get a Payday Loan? Here’s Your Answer
Applying for a Payday Loan: Everything You Need to Know