It is a safe assumption to have that most people are worried about finances one way or another. Unless you happen to be one of the 1 percent in the world, chances are, money concerns you, even if you don’t like admitting it. Whether it is mortgages, installments, or even paying back your friend, most people are in debt.
Getting into financial straits can be the most exhausting thing there is, and it’s one problem that could keep you up at night. It becomes more problematic if you find your credit score deteriorating, which will make your financial situation even starker.
While there are many problems associated with having bad credit, it’s the fact that it lowers your chances of getting a loan that matters the most. Fortunately, there are some things you can do to still get that money you need.
Understand your credit history
The first thing you need to do is understand your credit history and just how bad your financial situation might be. You can do that by looking up your credit reports because they will give you a good idea of why your score is the way it is.
There also might be some problematic remarks in your report, and you’ll want to verify that they are not unjustly placed, because those remarks can really get between you and the loan approval. The good news is that you can have them removed if it was an error, but for that to happen, you need to check the reports in the first place.
Improve your score
Now that you have a clear idea of where your finances stand, you will have to start working on improving your credit score so you could successfully apply for a loan. It is not easy, and it will take time, but it is definitely something you’ll have to do, even if it doesn’t yield the exact results you want.
The first thing you must do is start making timely payments. It doesn’t matter how big or small they are. When the time of the installment comes, you pay it without any delays. This is one of the most important factors playing into your overall score, and it’s something lenders pay great attention to.
The next thing you have to do is to limit your credit usage, and it’s advisable that you even restrict your maximum limit to 30 percent of its current value. That way, lenders can see that you are serious about improving your history, and you’re taking the necessary steps to do that.
You also should never apply for any new credit while you’re working on improving your credit history. A lot of people make that mistake and apply to new credit accounts, which is an obvious red flag for most lenders who’ll see you as a risk, or even worse, a person trying to run a scam. You can’t afford to apply for a new credit, unless you really need it, and more importantly, are certain you can handle it and its payments on time.
Finding the right lender
Your next step is finding the right lender, and this one will take some careful digging. While it is not easy to find someone who will give you a loan with bad credit, there are actually plenty of sources from which you can get one, but that is not necessarily a good thing. The problem is that lenders view people trying to get a loan with not so good credit as a big risk, and as a result, they impose high interest rates—much higher than normal.
This is why you need to look for multiple lenders and get different quotes, because you will find a disparity between the numbers you hear, and you naturally want to get an offer with the least interest rate possible.
There are certain avenues you can explore like credit unions, which might just be your best choice in certain cases. The great thing about these is the fact that they have a fixed interest rate of 18 percent, which is perfect considering the fact that some lenders offer twice as much a rate for loans with bad score. So, if you have local credit union options, you should definitely check them out to see if you can work something out.
Consider other loan options
There are other loan options that you can consider, but those have different terms and conditions. Auto title loans, for instance, are a kind of short-term loan you can get, but there’s another problem with those other than the fact that they last for 6 to 12 months at most. Title loans usually have higher interest rates, so they might not be the best choice for you.
The same applies to payday loans, which aren’t even in the form of installments, but rather a one-time payment you pay at the beginning of the month, also with a very high interest rate. Although there are personal loans for people with bad credit available out there, it always comes down to the right lender. While those are very risky loans considering the high costs, they still can help if you’re in a tight spot and need money quickly, also considering the fact that they don’t put much stock in your credit history.
Friends and family
While it is not an option many people want to resort to, friends and family can still be very valid sources to get the money you need for. While they most likely won’t reject your request because of your bad score, they will definitely have their concerns that you will need to address.
Before approaching someone close to you, it is best that you have a clear plan in mind on how you will be paying them, and more importantly, when. The last thing you want is for your financial situation to start affecting your personal relationships, too.
Having bad credit and needing a loan is definitely a tight spot to be in, and it will take some effort and luck to find your way out. But it is not the end of the world, and you can still get the money you need from various sources. The key is to take your time shopping around for the loan until you find the best possible offer.