If you are one of the 54 million Americans whose credit score is less than the ideal 600+ figure, then you already know how hard it can be to obtain favorable credit terms or even credit at all. And that’s before you think of the impact it can have on your finances, such as APRs on insurance premiums, obtaining rental properties, or even your career.
A poor credit score isn’t always due to being a delinquent payer; there are many reasons why you might find your credit score suffer due to things out of your control, i.e., being a freelancer, losing your job, the higher cost of living, and your income being stretched. So, while you work to boost those numbers, what are your options if you need to get a loan with a bad credit score to help you out in a pinch?
Here Are Some Ways to Get a Loan With a Bad Credit Score:
1. Research Lenders
Before you jump right into your search for a bad credit loan, take some time to research the different types of lenders on the market. You might find a lender that specializes in the type of loan you’re looking for. Let’s say you want a 2000 loan with no credit check as a freelancer, for example. Finding a lender who specializes in lending to freelancers can be the perfect option for you. It’s a relief to know that there are lenders out there who understand your circumstances. Don’t use the first result that appears in your Google search. Find a dedicated lender who understands your circumstances.
2. Payday Loans
Payday loans are often frowned upon as they’re extremely predatory and appear to take advantage of those caught between a rock and a hard place. If you have no other options and these lenders are the ones giving you a chance, it can be tempting to move forward.
So why are we including this option? If you’re confident you can repay the loan amount in a short time frame, you can reduce the interest you pay, which can, in some cases, be as high as 300% APR. If you only need to lend until your next paycheck, i.e., in a week or 14 days, a payday loan can be a perfect bridge. Remember, this is a short-term solution, not a long-term one. But for longer-term lending, this isn’t the right option.
3. Title Loan
Title loans are taken out against the title of your vehicle. The lender takes possession of the title and lends you the sum agreed to. How much will depend on your vehicle (if it’s a motorbike, they also claim possession of the bike). The age of the vehicle and its condition will determine the loan amount, and if you are still making payments on your car, you cannot unlock this line of funding.
4. Secured Loans
If you’re looking to get a loan with a bad credit score, secured loans can be a viable option. This is a loan taken out against collateral, and as the lender has the assurance of getting their money, they might be more inclined to lend to you at a lower credit score. It’s a hopeful sign that even with poor credit, you have options. Typically, it is a loan taken out against your home, and your property will be at risk if you default on your agreements and miss payments. But if you’re in a pinch and own property, it can be a viable option for you to explore.
