Tips For Bettering You Chances Of Getting A Loan With A Bad Credit Rating
With the recent downturn of the economy there are tons of Americans that have fell on hard times. In fact, dozens of small businesses and self-employed individuals have had to close up shop and look for alternative employment due to the lack of income. Unfortunately, this can have major repercussions on your credit rating.
With that being said, there are going to be times in life when you have to get a loan or borrow money for something. For instance, if you want to invest in a new car or home, there is a good chance that you will have to get a loan to do so. So, how are you going to go about securing a loan with a less than desirable credit rating? Below, you will learn some tips and information that will help you when it comes to securing a loan with an extremely low credit score.
Taking Advantage Of Equity You Already Have
Did you know that when it comes to securing a loan, you can take advantage of equity that you already have in your home or car? For instance, you can easily get a low-interest, tax-deductible line of credit against your current vehicle or home. However, doing this will put your assets in jeopardy, in the event that you are unable to repay the loan. If you have reliable means of income coming in, a disciplined repayment record, and are able to keep up with your bills, this is an extremely effective way to secure a loan, regardless of your credit rating.
Look For A Reliable Credit Union
When it comes to looking for loan for bad credit there really is no better option than a credit union. If you are not familiar with credit union they are very similar to banks regarding the fact that they accept deposits, give loans, and provide other financial services. However, the major difference is that they are non-profit based organizations that are run by members rather than CEOs and organizations. Their main goal is to service their members, while providing reduced fees, higher savings, and lower interest rates.
You can hit the Internet or look in the yellow pages of the phonebook to find a variety of different credit unions in your area. Be sure to shop around for a few different institutions, so you can ensure that you are getting the best interest rates and service possible. Some credit unites will offer loans for bad credit.
Seeking Out Peer To Peer Lending
It is probably highly possibly that you have never heard of peer-to-peer lending, since it has only been available since 2005. However, since its development it has become extremely popular and only continues to grow more popular. This is basically just an online platform that allows you to borrow money from other individuals rather than an institution. So, why would individuals online be willing to loan out money to random strangers?
When these investors loan out money they receive huge interest rates back on their investment, but this doesn’t mean you have to pay high interest rates. In fact, you can get a peer-to-peer loan with as little as 6% interest. Keep in mind that in order to take advantage of this service, you will have to go online to a message board and post the amount of money that you are looking to borrow. Once posted, tons of potential investors will look over your profile and decide if they want to lend you the money of not. Your credit rating will be posted, which can be a good and bad thing. Some individuals might be weary if you have a bad credit rating, whereas others might be more sympathetic.
Turn To Friends And Family
Friends and family members are always a good source, when it comes to looking for a loan or just financial advice. Most friends and family members will be willing to go above and beyond to help you as much as they can. However, when taking money from friends and family, you should take the situation seriously and treat it just like a real loan. For instance, you can have a contract drawn up showing how much money you are borrowing, and how much you expect to pay back. This will help avoid any awkward situations later on down the road.