If you are reading this article, you presumably already know that having a bad credit history might result in a lower number of loan options and higher interest rates. A very poor credit score is between 300 and 500, while a poor credit score, meaning significantly below the average, falls between 500 and 600. Fortunately, even if your creditworthiness is low, there are plenty of loan options and alternatives that you can consider.
Let’s start with the obvious: improving your credit score will expand your loan options and allow you to browse for lenders that offer lower interest rates. There are a couple of things you can do: request a credit report and check for mistakes in your credit history; pay your credit balances to lower debt utilization, or get a secured credit card to improve your credit history. Improving your credit score is possible and necessary for better loan options in the future.
Not all lender are alike as some will offer higher approval rates and longer repayment times for their customers. If you are a member of a credit union, you can apply for a loan, as they often consider not only your creditworthiness but also other factors. Online lenders are also an option, as they can be quite flexible with their requirements. Nevertheless, it is wise to exercise caution, as these types of loans oftentimes come with high interest rates.
Whether you are looking for a lender on the Internet, checking out apps like the Payday Loans App, or going to your local bank, be sure to always check the terms and conditions and ask for additional details when necessary.
Although they come with high interest rates, cash advances are a good option for cardholders as they allow them to borrow money against their current credit lines. Basically, it is a short-term loan from your credit card company that does not require an additional credit check.
This process will take two to six weeks and will be worth it if you need a considerable sum of money. HELOC is a home equity line of credit that is secured by your property and allows you to get a revolving credit line to use over time. Although the interest rates vary, monthly payments are usually high.
Even though borrowing from financial institutions is a more common practice, you should consider borrowing money from your relatives and friends. Don’t let the initial awkwardness stop you. After all, everybody has financial issues at some point in their lives, so asking won’t hurt. You might borrow money for a longer repayment time with lower interest rates, which won’t reinforce the debt cycle.
There are several alternatives to loans if you have a bad credit history. A low score does not automatically mean that you should limit yourself to unsecured, predatory loans. Try to improve your creditworthiness, look for non-traditional lenders, get cash advances, borrow from your relatives, or consider getting a HELOC loan.