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It’s estimated that approximately 33 percent of people in the U.S. have bad credit. Bad credit is a credit rating that falls between the range of 300 to 499. If you find yourself in this group of people, you may struggle to acquire financing and loans to make large purchases.
While this isn’t uncommon, it can be extremely frustrating. Although this is true, there are loan options for bad credit. To acquire the funds you need, there are certain things you have to do. Keep reading to learn some tips to get the financing or loans you need, even with bad credit.
1. Get a Line of Credit Based on the Equity in Your Home
If there’s enough equity in your property, then you may qualify for a tax-deductible, low-interest line of credit. With this type of loan, you don’t have to explain how you are going to use the funds, which is an added bonus.
However, remember that if you tap into the equity in your home, it is going to put your property on the line if you are unable to repay the amount borrowed. If you do have a reliable source of income, though, and you are committed to repaying the loan, then it is an affordable option – regardless of your current credit rate.
2. Apply for a Loan with a Local Credit Union
A credit union is similar to a traditional bank. However, a credit union is owned by the members. In most cases, the members are going to have something in common – such as living in the same area or working in the same industry. Because a credit union is a nonprofit organization, the earnings made are given to members, as higher customer service and lower fees.
3. Look into Peer to Peer Loans
Since 2005, Peer to Peer (P2P) lending has been a popular financing option. This is a unique online platform that lets you borrow the money you need from an individual, rather than an institution. This type of lending is growing in popularity because it is a more streamlined process. It’s also a great scenario for both the borrowers, who get access to lower interest rates, as well as the investors who are able to earn higher interest rates.
To take advantage of this lending option, you simply need to post a loan listing that lists what you want, and why you want to borrow it. The investors can then review the listings and choose the ones that meet their own personal criteria. While your credit rating is still going to be considered, most individuals are more empathetic to particular situations than a bank would be.
4. Request a Loan from Friends or Family Members
If you don’t have success with any of the other options listed here, then you may be able to go to your family, or close friends and ask for a loan for the funds you need. The key to making sure there’s no “bad blood,” is to treat the loan just like any other. Draw up documentation and outline the terms of the loan. When everyone knows what’s expected, it makes the situation much easier.
5. Get a Co-Signer
If all else fails, you can see if someone will cosign on a loan with you. If you have poor credit, and you can find someone with good credit who is willing to be your co-signer, then you will likely be able to acquire the funding you need without much of an issue.
While having bad credit can be difficult, with the tips here, you can get the funds you need, without the stress and hassle that usually goes along with this task.