We all need credit at some point or another. With the high cost of everything from food to homes, it is almost impossible to live in a cash only society. So, what can one do if they are trying to recover from a bout with bad credit? Whatever your reason for needing credit, professionals at the Personal Money Network point out that there are several things that can help you to get back on track.
Even with bad credit there are ways to get a personal loan, but you’ll have to put a little work into it. You won’t get that loan following the traditional means of acquiring credit but if you’re ready to try something new, one of these suggestions can help you to get what you need.
1. Know Where You Stand
Before you put in an application for a new loan, it’s important to know exactly where you stand in terms of credit. It is important to review your credit report at least once a year so you can see what lenders see when they pull your score. While everyone doesn’t have a score over 800, an acceptable score for many lenders could range anywhere from 620 to 679. However, a poor credit score could fall below 580. Knowing this number and what was factored into it can help you to determine which steps you need to take to get your credit back on track.
2. Bad Credit Loans
Getting a personal loan is rarely the problem. There are plenty of people who will lend you money even with bad credit. However, many of these predatory lenders get you trapped in a debt cycle with high APRs that make it almost impossible to get out from under the weight of debt you will incur.
Instead, look for alternative lenders. These are lenders that will take other things into consideration when issuing a loan and not just your credit score. If you don’t have the time to build your credit then consider one of these lenders for an emergency loan rather than getting a payday loan or agreeing to extremely high interest rates.
3. Offer Proof
Lenders usually turn down loans because they’re not sure if can repay the debt and any interest that may accrue. If you are prepared, you can go in with proof in hand. By offering proof of income or getting a cosigner, you can show them that you are able to handle the payments.
One way to offer proof is to request a secured loan. This gives you a way to make you look more appealing to the lender. Secured loans are given in exchange for an asset that has some financial value. If it’s not an emergency, putting up cash for a secured credit card may be all that is needed to get that personal loan you need.
4. Shop Around
There are many ways to get the cash you need but take your time and do a little research. Find a lender with a good reputation, that you know you can trust and has standards and requirements that you feel comfortable with. Expect to pay higher interest rates for a lower credit score, but there will be some lenders that will be more than happy to work with you.
Look for options like secured loan, which are the easiest since you will have to offer collateral. Peer-to-peer lending or crowdfunding also have become more popular because the funds are raised by a number of people who may be willing to support your need.
5. Join a Credit Union
While credit unions are like banks, they don’t determine loans based solely on your credit score. However, to get this privilege, you need to be a member. Their decisions are usually based on a variety of factors like where you live, the kind of work you do, and sometimes even where you went to school.
These usually come with lower interest rates and fees, which can translate into lower costs overall. They are well known for not looking just at the numbers but are more likely to take a personal interest in you.
Bottom line is that while you may have poor credit there are people out there who will be more than willing to give you a personal loan. Do your homework and avoid the many scams that are only designed to suck you back into debt. With proper planning and the right mindset, you will be able to find the kind of help you need.