In the financial world, your Fico score determines your eligibility for the type of funding you have access to and at what interest rates. Unfortunately, those who have a low Fico score tend to fall in between a rock and a hard place when it comes to getting the loans they need to fund their purchase. If you are marked as having bad credit due to your credit score, we encourage you to try out the options below to obtain your next loan.
There are two main financial terms you need to be aware of as a loan borrower. These are secured and unsecured loans. Secured loans are those which the lending institution has a lien on a borrower’s asset, known as collateral. In the event that the borrower is unable to meet their financial commitments, the lending institution can seize the asset they have a lien on in order to recoup the money owed to them from a loan. Unsecured loans are those which don’t require a borrower to provide any collateral. If you have bad credit, many lenders will require that you offer some sort of collateral to obtain the loan. This could be a vehicle title, mortgage deed, or retirement accounts.
Get A Co-Signer
When you have a bad credit score, it could be a result of numerous factors. These go from unhealthy financial habits to being a young adult with no borrowing history. In the event of the latter, many students who are looking to further their education through college need to seek out a co-signer for their student loans. A co-signer is a person who has good credit and will vouch for you on the loan. When the loan is issued, you and the co-signer are both responsible for the payments being made.
Talk With A Credit Union
Credit unions tend to look more at the overall picture of the borrower instead of just their credit score. You will need to join a credit union in order to take out a loan. It’s typically small fee. You’ll then have a better chance of getting approved for a loan as compared to trying to get one from bigger banks. Credit unions tend to assess where you work, educational history, living arrangements, and so forth in their lending decisions.
Ask Family Or Friends
In the event where you’re being shut down by banks for a loan, you may want to look towards family and friends. These are individuals that know you. They’re more likely to lend you money at a lower interest rate than banks. In addition, you will be more likely to repay them as they are people you’re around often. Be sure to set up a clear document stating the borrowing terms so that you both fully understand your commitments.
Having bad credit doesn’t mean that a loan is untouchable. Rather, you just need to look to alternative sources in order to obtain the funding you need. The above are some of the easiest ways to get a loan if you’re currently dealing with a bad credit history.