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3 Ways to Get a Loan Even if You Have Bad Credit

According to national statistics, roughly 58% of all Americans have a FICO credit score of 708 or greater. While this marks an upswing from years past, it’s little comfort to the thousands of people in the country struggling with credit issues. Bad credit can impede things like car and home ownership, due to the inability to obtain conventional loans.

From the lender’s perspective, their reasoning for denial is pretty simple. They rely on your credit score to prove you will be able to pay back any loans they provide, and a score that’s too low reflects poorly in their eyes. However, this fails to account for people who may have low credit scores for reasons outside of their control, like medical hardship or being the victim of fraud. In these situations, it’s important to know the methods of getting a loan if you have bad credit. 

Consider Alternative Lenders Besides Banks

In general, banks are among the most difficult lenders to work with if you have bad credit. That doesn’t mean you can’t find alternative options if you really need a loan, though. One good place to start is credit unions. Credit unions, in general, have a little less stringent standards when it comes to banks, so if you’re in need of a small loan that you’re confident you can pay back, there are options out there you can look for. At the same time, if you’ve been a good customer with a bank for years, and suddenly have a credit score drop, you may be able to ask them to consider your entire history when it comes to a loan, not your recent history.

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If this option doesn’t work out, you can start looking for other options. E-lenders and merchant cash advances often offer smaller loans without requiring credit score at all or allowing for lower credit scores. The drawback a lot of the time is that these companies require large interest rates as a way of ensuring they recoup their investment. If you research these types of companies, make sure that you find one that is legitimate and credible. People have been scammed when they are desperate for bad credit loans.

Enlist A Co-Signer

Sometimes, you can lean in on your personal network if you’re not able to get a loan with your own credit. For smaller amounts, this may mean simply borrowing from family and friends. For larger amounts, though, you may want that same person to come aboard as a co-signer. By co-signing onto a loan with you, their credit history will factor towards the qualification, helping you get loans you perhaps couldn’t on your own. However, the drawback here is that they take on a lot of risk in doing so. If you were to default on the loan, they would be required to pay it back, and the default would also show up on your credit history.

As a result, it’s important that if you want to get a co-signer, that you reward their trust. Explain your concrete plan to keep up with the payments before they sign. If something changes, be sure to alert them as soon as possible.

Title Loans

As mentioned before, the issue for people with bad credit is that lenders won’t trust them to pay back their loan. One way to work outside of this issue is looking for a way to secure the loan with a piece of collateral. Some people do this with property or valuables, but that may not always be on the table depending on your assets/living situation. Something that is more accessible is a title loan. 

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A title loan is a secured loan contingent on your car. Because of this, the lender knows that if you were unable to pay the loan back for whatever reason, they would still be able to recoup the costs by taking the vehicle. In practice, what this means is that a title loan lender is more likely to give out loans to people with bad credit since they know that they will get their money back one way or the other. Many title loan companies also specialize in getting the funds to their clients quicker than professional loans. This means that if you have a steady income but little cash on hand, and an emergency comes up, you have a perfect option.

People with bad credit don’t have to say goodbye to dreams of business ownership or other financial plans. However, they do need to be more creative and enterprising in order to find the cash that they need to get started.





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