As our regular readers have heard time and again, having bad credit hurts in so many ways.
Bad credit can impact your job prospects, the rate you pay for car insurance and even whether you can rent an apartment or not.
Bad credit just seems to get in the way of everything.
But what happens if you have bad credit and an emergency comes up where you need to borrow money quickly? Sure, you could try one of those payday loan centers or a “fast cash now” subprime lender.
But if you’re not careful, you could find yourself in over your head and owing more than you’re able to pay back.
There are actually alternatives to high interest rate lenders, and one of them may be right for you.
Here are some suggestions for how you may be able to get a personal loan when you have bad credit.
1. Get a second opinion.
Approach your bank or credit union and ask them what kind of personal loan you can qualify for. Ask specifically what your credit score would need to be in order to get a personal loan from them.
If you bring in a copy of your credit report and are prepared to address each negative mark on it, you may find them willing to work with you. This is especially true if you’ve had a long-standing relationship with them.
But even without that, they do have flexibility when it comes to certain lending requirements. Just be honest.
2. Try for a secured loan.
There are lenders out there who will make loans based on the value of personal property – typically a car.
If your vehicle is paid off and has a value at least double the amount you’re seeking in a loan, this may be an alternative for you.
“Depending on how quickly you need
the loan, try bringing your score up.”
3. Consider a co-signer.
Lenders who won’t give you the time of day may be willing to lend the money based on someone else’s good credit.
However, the problem with a loan of this type is now it’s not just your credit score on the line.
Be very careful with this type of an agreement.
4. Take out a personal loan from family.
Similar to having a co-signer, having a family member lend you the money can be a dangerous proposition.
If you find you are unable to pay back the loan, it’s more than just your credit that can get damaged.
One suggestion is to offer collateral to secure a loan from a family member. If it’s something they know you value, this may be a way to ensure repayment.
5. Look for peer-to-peer lending services.
Peer-to-peer lending has grown in popularity in recent years in large part due to the fairly high interest lenders can earn.
With bank savings accounts and CDs paying next to nothing, people who want to take a little more risk can earn 12 percent or more lending to you.
This rate of interest may work for you as well, so it’s worth checking out.
Getting a personal loan when you have bad credit isn’t easy, but there are ways you can make it work.
I will stress again it’s not worth going to the payday loan centers or subprime lenders for money. These services can charge the equivalent of 200 percent to 300 percent or more as an APR.
Try the other suggestions in this guide first.
Also, depending on how quickly you need the loan, it may be worth trying to bring your credit score up first. Having good credit will mean you have access to better lending rates and can avoid the costlier methods all together.