Needing a Loan With A Bad Credit Score

Needing a Loan With A Bad Credit Score

Whether you have bad credit or no credit, getting a loan can be difficult. You'll likely pay higher interest rates because you are a high risk customer. First you will want to step back and examine why you have bad credit and continue to be in debt. Breaking poor spending habits is really where you need to start. There are some things you can look into, however, if you need a loan.

See If Someone Will Co-Sign a Loan For You

You will likely secure a lower interest rate if someone co-signs a loan for you. This could be a family member or friend who trusts you to pay the loan back. Consider that if you default on your loan, he/she will be responsible for the debt. Make sure you are able to pay back what you borrow and don't leave someone else stuck with your bills.

Home Equity Line of Credit

One place people forget to look is at the equity they have in their home. You may have built up equity in your home over time. If so, you may be eligible for a home equity line of credit which offers low interest rates and uses your home as collateral. It works similar to a credit card in that you are approved for a specific amount of credit. That number may be determined by taking a percentage of the value of your home and then subtracting what is still owed on your mortgage.

You don't necessarily borrow the total amount you are approved for, rather only what you need to cover a large expense like college tuition, medical bills, or home improvement. If you default on this line of credit, you will likely lose your home, so make sure you are able to pay back whatever you borrow.

Consider a Boat Title Loan

This works similar to a home equity line of credit in that your boat is collateral for your loan. Therefore if you default, you lose your boat.

Seek Out Credit Unions

Credit Unions are owned by their members, not a big corporation, and many have programs to help you improve your credit scores and get back on your feet. These programs can also help you build good credit if you have no credit. Call your local credit unions and inquire about their programs and becoming a member.