When you run into a major expense and don’t have enough cash on hand to cover it, what do you do? If you are like most people, you apply for a loan or a line of credit that will allow you to cover that expense and pay it off over time. For some of you, obtaining a loan isn’t a huge hassle.
If you have bad credit, though, finding the financing you need can be a nightmare. Here are some tips that can help you get the loan you need.
It happens to the best of us!
1. Suck it up, Buttercup
If you’re in dire financial straits, now is not the time to nurse your pride. Do you have friends or family members who can loan you money? Loans from family and friends might come with a non-small amount of grief and goading, but they also don’t require credit checks and are often interest free.
Of course, if you default on these loans, you could damage your relationships, so make sure you can pay everybody back in a timely manner.
2. Suck it up, Buttercup Part 2: Alternative Boogaloo
If your friends can’t loan you money, perhaps one of them will serve as a cosigner on the loan you’re trying to get. Having a credit-worthy cosigner can often make up the difference between qualifying for a loan and being sent packing.
3. Do You Have Equity?
Given the state of the economy and housing market, nobody really wants to risk their property rights. If you’re up a financial creek, however, borrowing against any built up equity can help you get the money you need without a lot of credit hassle.
4. Apply at a Credit Union
Credit Unions are often more lenient with their loans and credit requirements than traditional banks. They also offer lower interest rates. Consider joining a credit union and taking out a loan through your local branch.
Even the form can be stressful!
5. Peer-to-Peer Lending
Depending upon how much you need, you might be able to get peer-to-peer loans. These are exactly what they sound like. You write a post about how much you need, why, and the rate at which you expect to be able to pay back the loan and then, hopefully, a lender will see it and give you what you need.
The people who lend through peer-to-peer lending programs are authorized to check your credit, so that could still be an issue, but humans are more forgiving of bad circumstances than banks, so maybe you’ll have better luck.
6. Bad Credit Programs
There are some financial programs out there geared toward helping people with bad credit get the funds they need. Simple Google searches for things like “auto financing for bad credit ” or “personal loans for bad credit” will turn up a plethora of lending institutions.
Make sure you work with domestic lenders. Domestic lenders are regulated by banks and the government and you will be protected to a certain degree against fraud or terrible lending terms. International loans might seem easier, but you risk more and are more likely to fall prey to a scam when you work with those lenders.
Finally, the most important thing you can do if you want to improve your chances of getting a loan in spite of your bad credit score is to work to fix your credit! Start paying your bills on time – even if all you can pay right now are your minimums – that’s better than nothing, and it shows potential lenders that you’re trying to get your finances under control.
What’s more, fixing your credit in and of itself is a boost in the likelihood that you will qualify for a loan!
Erin Steiner is from Portland, Oregon. She has written extensively about personal finance, small business, and other topics all over the web.