How to get a loan even if you have bad credit

by timescapes .

There is no denying that people with a poor credit history are generally treated differently as compared to people with a healthy history. In fact, there are financial institutions that will not look at you twice when the credit checks ascertain that you have bad credit. It is as if having bad credit is a bad omen of sorts that high street banks and other financial lenders want to avoid at all costs. Simply put, individuals with bad credit are deemed as a risk to the financial well being of an institution and that is why they are never approved for a loan no matter how pressed they might be for cash.

If you have been on the receiving end of one rejection after another, there are a number of alternatives at your disposal that might actually get you approved for a loan even if you have bad credit.

  • Provide your lender with collateral

If you have bad credit and are worried about getting rejected when you apply for a loan, the best way to have your application approved is by going for a secured bad credit loan. This is a situation whereby you pledge an asset of your own as collateral for the loan you are taking. Most lenders will overlook your credit score if you provide collateral as it doesn’t leave them with an egg on the face in the unlikely event that you default on repayments.

Though very much similar to banks or financial institutions, credit unions are slightly different in the sense that they are owned by members with something in common. These are individuals who may be working in the same profession or simply came together for a purpose. Ordinarily, credit unions advance loan facilities to members at very low interests. However, to get the best deal, it’s essential that you make comparison of various credit unions.

  • Seek for a loan from friends or family members

Have bad credit and have been denied access to credit from multiple financial institutions? Why not ask a friend or family member for an advance? The good thing about this kind of loan is that there are no credit checks and you will get access to loan at very low interest rates. The loan is based on a mutual agreement between the two of you and you don’t have to worry about spiraling interest rates as is the case with financial institutions. However, you need to keep your end part of the bargain as failure to repay on time might lead to strained relationships.

  • Get a guarantor

Getting a guarantor can get you approved for a loan even if you have bad credit. However, there are rules of engagement when it comes to getting a guarantor. For starters, your guarantor must be having a healthy credit history. Secondly, he or she needs to be aware of what they are getting into as they will be liable to repay your loan in the event you forfeit payment. However, if you have someone who can act as your guarantor, you will get approved for a loan even if you have bad credit.