Four Ways to Borrow Money with Bad Credit

April 02, 2019
Popular belief is that when you have bad credit, you cannot get a loan. While this is true for certain types of loans, there are other options that help out people with poor credit.
Four Ways to Borrow Money with Bad Credit

Co-Signed Loan

To get a co-signed loan, you need a family member or close friend to vouch for you. They sign the loan with you. By doing that, they give their word that if you do not make your payments in due time, they will do them in your stead. Their credit score is considered along with yours when you apply for the loan. If you skip a payment or do not make them, it will affect your co-signer’s credit, and yours, negatively. If you are certain that you have the means to repay the loan, getting a co-signer is a good option. You only need to find someone who has complete trust in you and is ready to put their credit in line to help you out.

Secured Loan

A secured loan is for you if your credit score is not the best, but you have assets that you can give as collateral. Your assets, like your car or house, are there as a guarantee that you will repay the loan. If you don’t, the financial institution can seize your assets to pay themselves. With this loan, you need to be certain in your capacity to repay the loan, or you could lose your possessions.

Online Loan

One often overlooked type of loan is the online loan. While online loans often have high interest rates, they are perfect for someone who has no assets to give as collateral and has no one willing to help them out by co-signing a loan. Online lenders do not make credit verifications. They make sure that you have a steady job and have the means to pay back the loan. You apply online, and when approved, the money is in your account by the end of the day. The whole process is safe, paperless and confidential, and you have three to four months to repay the loan.

Personal Loan from Friends or Family

Asking friends or family members for money is never easy, which is why it should be a last resort option. If it does come to that, prepare yourself beforehand. Make a detailed plan to describe why you need the money, and where exactly you will use it. Print out your bank statement so they can get an idea of how you manage your finances. Offer to pay interest, and agree on a repayment schedule. Put everything in writing. Both parties should sign the written agreement, and each keeps a copy. If you value your relationship with the person willing to help you out, you will honour your agreement and make all your payments in a timely fashion.

Plan for the Future

Look ahead. Pay your bills on time, pay off your debts. With time, your credit score will increase, which will open new doors and better credit options for you in the future.