Being an adult in the 21st century is hard, especially with the Great recession’s effect being experienced by all. If you are someone with a poor or yet non-existent credit score, you have probably asked yourself the above question already.
In all honesty, getting a personal loan when you have bad credit is quite difficult. There is no way I can sugarcoat the truth for you since it is a fact that lenders will see you as a high-risk borrower.
Sometimes, the risk might be too high for them to take and that is where the problem starts. However, don’t lose all your hopes yet.
If you are in an “I need a loan but I have bad credit” situation, there are still some ways through which you can get a loan. I know how demoralizing it can be when the big banks turn you down, but they are not the only option for you.
However, before I explain the 5 ways to get a loan when you are in an “I need a loan but I have bad credit” state, keep in mind that these are options that you should use as your last resorts.
You should always try to work towards having a good credit score, and if you are lucky enough to have one, make sure you stay disciplined enough to maintain it!
Without further ado, let’s talk about how you can get out of the depressing “I need a loan but I have bad credit” phase:
5 ways to get a loan when you have bad credit:
· Ask a friend or relative for a loan
When I was going through a bad time, my only backup was my family. I had asked my uncle to give me a loan which I promised to pay back within 5 months and he agreed. Those 5 months were the turning point in my life and I managed to make things right.
Therefore, asking a friend or family can be a valid option, as they are the people who are most empathetic and understanding towards us. However, make sure you can pay it back! Otherwise, you will end up destroying a personal relationship.
· Ask someone to co-sign a loan with you
Sometimes, the people around you might be unable to give you a loan due to lack of cash. However, if someone has a good credit score, he might be able to help you.
If you can convince that person that you will pay the installments on time, and if he trusts you enough, he can co-sign a loan with you.
This means the lender will then set the terms of the loan based on the person with good credit, and both of you will be held equally responsible for the loan. The loan will be recorded on both your credit scores.
So, if you fall behind on payments you will be severely damaging your cosigner’s credit score. Make sure you don’t do that!
· Visit Saccos
Saccos are owned and run by a group of similar people, such as citizens of the same neighborhood or people of the same profession. Therefore, if you can find a credit union to which you can link yourself to somehow, you might get a loan.
· Try out person-to-person lending
Otherwise known as peer-to-peer lending, this type of loans are online-based. Instead of applying to an institution, you will basically be interacting with a person directly.
The procedure is quite simple: the borrowers have to post a loan listing that consists of how much money they need and why they need it for. The lenders judge the lists based on needs and credit score and select which one they want to fund, but they might overlook your score for a genuine, good-enough cause.
· Put your home on the line
In my opinion, this should be the very last thing you could do.
By using your equity in your home, you can apply for a home equity loan. You are basically giving your home as collateral, which means they will have the right to cease your home if you fall behind on payments.