Almost everyone has been there at one point or another – most of us have experienced running out of funds or not having a good credit score. And when you’re in need, it can be difficult to avail of the loan you require, as many lenders are unnecessarily strict about their conditions and requirements. You may be seen as a ‘high risk’ client, simply because you’ve had some bad experiences in the past. Traditional banks and financial institutions wouldn’t be so eager to give you the loan you need, and if you go to other sources, you may end up paying a high interest rate (definitely something that can affect your life in the future!). But there’s no need to worry or be in despair just yet – there are ways to get a good loan even if you have a poor credit rating. Here’s what you need to know:
Your options to getting a loan even with a poor credit score
1. A peer-to-peer loan
If you’ve never heard of a peer-to-peer loan before, you’re one of the many who haven’t been able to take advantage of it yet. Peer-to-peer lending has actually been offered by online platforms since the year 2005. The concept behind peer-to-peer loans is this: rather than borrowing from an institution, you borrow from an individual. So you may be asking, how does it work? Well, it works like this – you post a listing for a loan online which includes the exact amount of money you would like to borrow and why you need it. The investors will then review these listings and select those which appeal to them or meet their requirements. Whilst your credit rating will still be checked when it comes to peer-to-peer lending, an investor may be more willing to give you that loan out of empathy or a personal understanding of your situation.
2. A loan from friends or family
Again, we’ve all done this before; who hasn’t received a friendly, casual loan from friends or family at one point or another? And if you’re leery of going online and seeking a loan from a peer-to-peer lending site, you can always turn to family or friends. But rather than making the loan an ‘informal’ affair, treat it more like a business deal or transaction so your friends or family will have the assurance they need that they will be paid back. For instance, you can create a written contract or agreement with stipulations on the loan amount and even the rate of interest. The agreement should also include the terms of payment as well as any type of collateral you are putting up in order to receive the loan. For your friends or family to be more confident of the loan, state what will happen if you cannot repay the loan as well.
For those who are understandably wary about getting a loan from friends or family for fear that it might affect their relationship, there are other options, such as getting a guarantor loan (see below).
3. Get a guarantor loan
Simply put, a guarantor loan is a loan you apply for with help from a co-signer or ‘guarantor’ (preferably one with a good credit rating). This might entail relying on friends or family to help offer a guarantee for the loan, but what’s good about it is that everything is done in the proper, legal way, and all you have to do is make sure that the loan is repaid according to the terms specified. Keep in mind, though, that if you fail to repay the loan, the institution or lender will turn to your co-signer in order to receive payment. You can learn more about the advantages and specifics of guarantor loans on the LWG website.
4. Turn to a credit broker
Another, even better option to get a loan would be to turn to a credit broker such as CreditPoor lenders. A credit broker works as an invaluable assistant in your quest for a loan, as they can recommend a good number of lenders who are willing to assess your loan requirements even if you don’t have a good credit score. With credit brokers, you can get personal loans, short-term loans, and guarantor loans as well. Just make sure the credit broker you deal with is licenced so they will provide you with an ethical, reliable, and trustworthy service.
With the above-mentioned options, you have a greater chance of getting the loan you need. Good luck!