When you have poor or no credit, borrowing money can be an enormous undertaking. To a financial institution or bank, poor credit health implies that you may not be able to repay a loan. This may make you an unlikely candidate and even a high-risk borrower because loaning to those with poor or no credit could put the financial institution or bank at risk.
With that said, there are some solutions for those with bad or no credit. If a candidate can prove that he or she can in fact repay the loan by providing evidence of regular income, other loan options may become available to you.
Here’s what you can do to get a loan even with poor or no credit.
1. Borrow from family or friends
Particularly for smaller amounts, borrowing from a friend or family member can be a simple solution. Be sure to iron out all the details, including how much they are willing to lend, when they expect to be repaid by, and interest if your friend or family member decides to charge you that as well. Having this agreement in writing can help you avoid any miscommunication or confusion pertaining to the terms of the loan. Furthermore, open and honest communication is crucial, and can prevent a relationship from going sour.
2. Ask someone to co-sign
When someone co-signs a loan with you, they are showing to a bank or financial institution that they believe you will be able to repay the loan in full. This show of good faith is important because in the event that you fail to repay the loan, the lender will go to your co-signer for the full payment. In addition to that, the repayment history will appear on both your co-signer’s and your credit reports. If you don’t pay it off, this could result in lowering your co-signer’s credit score. Needless to say, your co-signer will need to be able to show that they have better credit health than you do.
3. Visit a credit union
Similar to banks, credit unions also offer personal loans. The difference is that credit unions are owned by its members. Any profit earned by a credit union is invested back into the not-for-profit organization or paid out to the members. Because they do not have to pay taxes (they’re not-for-profit, after all), they are able to offer lower interest rates when compared to traditional banks or financial institutions. Before signing on a loan, be sure to compare the rates among multiple credit unions to ensure you are getting the best deal.
4. Get a secured loan
Secured loans are another option if your credit score is too low for the bank or a traditional financial institution. For a secured loan, you are to borrow against an asset that you own (house, car, etc.). This asset will be held as collateral against you defaulting on the loan by the lender. These generally offer lower interest rates and better terms. When paid off, a secured loan can also better your credit score.
5. Bad credit loans
Bad credit loans are similar to secured loans, but they do not require your assets. Instead, these loans are designed for those who do not have good credit and offer reasonable interest rates. Some financial institutions will also provide the option of a repayment plan that can help you rebuild your credit over time. UrLoan is an example of a bad credit loan provider. You are not required to own a home to get a loan with us; approvals are based on employment and verifiable income. Once you pay back your loan on time with us, you will automatically be eligible for interest rate reductions to save yourself borrowing costs.
Before committing to one of these options, be sure that you understand all of the costs, terms, and fine print before you apply. To avoid further troubles, only borrow as much as you can pay back, and make paying back the loan your main priority the moment you get paid.
In the event that you’re having trouble managing your finances and maintaining a positive credit score, urLoan can help you rebuild your credit and regain financial health sooner through our loans. Our approvals are based on employment and verifiable income, unlike any other traditional means of credit score used by such institutions as banks, or taking security on your assets.
Learn more about how urLoan can help you with loans and call us at 1-855-723-5626.
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