Ways to Get a Bad Credit Loan and Make It Count
For people looking to borrow money, having a good, or excellent, credit score can mean the difference between getting the loan you need and being declined. But, while going to a traditional lender and asking them to give you a loan based on your credit history is a good way to get the financing you need, it is not the only way. Here we will take a look at some alternative ways that those with poor credit scores can get the loans they need, and how to make sure these loans count on your credit profiles with Experian, Equifax, and TransUnion.
Borrow from friends or family
One of the surest, and most hazardous, ways of getting the financing you need to purchase a car, start a business, or pay for unexpected medical expenses, is to borrow from your loved ones. Of course, loved ones will probably be the most likely to help you out in your time of need. But, should you find yourself unable to pay the loan back according to the terms, you may wind up damaging important relationships which are frankly more important than the money. Still, if you are going to ask a friend or family member for a loan you can have it count on your credit profile by asking them to co-sign for a loan, instead of borrowing cash from them.
Go to nontraditional lenders
Depending on the kind of loan you’re looking to take, you may be able to get the funding you need by going to nontraditional lenders. For example, if you’re looking to make a real estate purchase hard money lenders may be willing to give you the money you need to complete the purchase, despite your having bad credit. Some of these lenders will even report your on-time payments to the credit bureaus. If you’re looking to start a business, perhaps a financier will put the money behind your dreams in exchange for a percentage of the company. Overall, the places you should look for alternative financing will depend largely what you’ll do with the money once it’s lent to you. With these kinds of options it may be more difficult to ensure that Equifax or Transunion will report the loan, but it is wise to shop around and see what your options are before committing.
Look into possessions you can collateralize
For those who really need money fast, but do not have the credit to qualify for a traditional loan, perhaps you can collateralize a valuable item that you have in your possession in order to leverage the loan funds you need. For example, many people collateralize their paid-off automobiles in order to take a car title loan and pay for unexpected expenses. The benefits of this option are that you get to keep driving your car while repaying the loan and that these loans are often reported to the credit bureaus. The downsides of title loans in general are that they carry stiff interest rates and you risk losing your car should you be unable to repay. But, automobiles are not the only possessions which can be put up for collateral. Valuables such as collectibles, musical instruments, and even furniture, can be collateralized in order to secure the loan funds you need.
In general there is no substitute for having good credit. Though the above options may allow you to access the loan funds you need in a pinch, there is a reason why most individuals and businesses turn to the traditional credit markets when looking to get a loan. However, if you find yourself in need of immediate cash in order to pay for an urgent expense or make a once-in-a-lifetime investment, the above options may be of use to you. And in the end, if you select a loan option which helps build your credit, it can be an overall win-win solution.