How to get Personal Loans with Bad Credits
A question that we receive from most people is can we get personal loans with bad credits? The answer is yes you can. Recently, lenders have come around to appreciate the fact that bad credits do not automatically mean that a person cannot repay a personal loan. Here, we look at some ways through which you can apply for a personal loan even with bad credit but still be successful in your application.
What are the steps to take?
- 1. Use a home equity line of product
Regardless of your credit score, if you have enough equity in your product, you can still get a low-interest personal loan. All that a lender needs is proof that you can repay your loan and that is what your home or vehicle provides. In case, you do not repay the loan, the lender can take your home and recover his money. However, before putting your home or any other asset as a security for a loan, consider the downsides of your action and be sure it is what you want.
- 2. Consider the credit unions
While it is true that banks consider your credit score, some credit unions might overlook that. Given in mind that the credit unions are not in to make profits, you stand a higher chance of having your personal loans application approved here than in the banks or other commercial institutions.
- 3. Get a friend as a guarantor
Even though some institutions might have lost faith in you because of your credit score, find someone who can guarantee that you will repay the loan. As aforementioned, all that most lenders want is a guarantee that you will repay the loan. Taking someone who has a better credit score as your guarantor increases the chances of qualifying for a personal loan.
- 4. Try the peer to peer loans
Peer to peer loans are ones where you borrow money directly from another person and not a financial institution. Since its establishment in 2005, this system has been in place. It continues to offer online services with its popularity growing day by day. While your credit score is still a factor here, the advantage is you get to borrow money from an individual who might be more empathic as compared to the banks and other financial institutions.
- 5. Take a loan from a friend or family
If the banks will not let you get a loan because of your credit score, try borrowing from a friend or family who understands your situation. However, the whole process should be legal and sign the necessary documents needed for formality purposes. Treat it like any other loan and the first step to redeeming yourself from bad debts and credits.
Bad credit does not necessarily mean that you are doomed and cannot apply for a personal loan. If anything, more lenders are willing to give you the loan as long as you prove you can repay the loan using other means. For instance, you can use your asset as a security for the loan or you can take a friend to co-sign the loan for you.