When it comes to your finances, bad credit is that one thing you never want to have. When you have a bad credit score, you’ll have a hard time getting approved for anything. Whether it’s a mobile phone contract you’re applying for or a personal loan you need for a financial emergency, bad credit almost always gets in the way of your approval.
But it’s not all bad news when you have bad credit. You can still get approved for a personal loan or raise that funding you badly need despite it if you consider the alternatives below.
Use your home equity
If you’re a homeowner, you can opt to use that as a line of credit to get a low interest personal loan. Just remember that tapping on this asset may put your home at risk of repossession. When you take out a loan using your home equity, make sure you borrow only what you need and you can comfortably afford to pay for the monthly repayment fees.
Apply from credit unions
Another great alternative to try is a credit union loans. If you’re a member of a credit union, might as well take advantage and take out a small personal loan. Credit unions act just like banks only that it is owned by the members. Because these credit unions are nonprofit organizations, interest rates are generally lower hence more ideal for people with bad credit. The amount you can borrow may not be as much as what you’ll get when you use your home equity but credit union loans are viable solutions to small and pressing financial problems.
Try family and friends
You may also try family and friends for a small personal loan. Not only will you get minimal to zero interest when you borrow from family or friends but it’s also quicker and easier. Just make sure that you treat this loan like any other loan. When you say you’ll return the money at this said date, do it. Otherwise you might put your relationship at risk if you fail to come through with your promise of repayment.
Check out peer to peer lending
Other than credit unions, family and friends, you also have peer to peer lending to check for a personal loan when you have bad credit to worry about. Also known as P2P lending, this type of scheme was started back in 2005. The platform lets you borrow from a peer or basically directly from the lender. Because the middleman is eliminated, the interest rates may be lower too. The transaction happens online with the borrower posting a loan listing. A peer or lender checks your listing and may respond if you meet the lender’s criteria.
Compare bad credit loans
Finally, you can also turn to bad credit loans which are especially designed for people who are struggling to get approved for traditional personal loans. Bad credit loans come in different forms including payday loans, logbook loans and guarantor loans among other choices. Keep in mind though that these type of loans may come with heftier interest rates seeing the high risks your lender is taking when lending you money.