Having a bad credit rating is not something that can be very limiting when it comes to getting a loan. But not to worry, there’s a lot you can do to counter this. Lenders are in plenty and there are multiple kinds of loans you can go for to increase your chances of success. In this guide, we discuss some of the best loans to go for.
This simply stands for ‘home equity line of credit.’ It’s a loan you take when you’ve got equity in your home. They remain some of the most sought after loans for people with bad credit simply because they’ve got reasonable interest rates and zero restrictions on what to do with the money. However, you risk losing your home when you fail to pay the debt in full.
Bad credit loans
Some lenders focus on giving bad credit loans to their customers. They are tremendously easier to qualify for when your rating is low. But you need to be careful when taking these kinds of loans. Have the amount you need and can pay for before you apply. Taking a huge loan can trap you in an endless cycle of debt as they have considerably high interest rates.
Credit unions are easier to work with. They are more relaxed and don’t have rules as strict as the ones found in banks. With credit unions, you’re more likely going to be accepted when you’re part of the union. Joining credit unions is also an easy process, and they’ve got lesser fees and interest rates. A good tip is being involved in a union with the same interests as you. For instance, if you’re a teacher, you could participate in a teacher’s credit union.
Secured loans are also available for people with poor rating. Apart from having your home as collateral, you could also have other assets such as your car as in the case of logbook loans. In fact, with logbook loans, your credit rating may not even be put into consideration when determining if you’re qualified for the loan. You may also have a much longer repayment period with lesser interest rates as compared to unsecured loans.
Co-signed loans can assist you in getting a loan by using someone else with a better credit rating. If you’ve got a willing family member or close friend, then this may be your best move. The lender would base your application based on your co-signers score, so it’ll be a lot easier to score a deal. However, these kinds of loans can stain your co-signers credit rating if you’re not prompt enough or miss payments.