The average American household has about $9000.00 sitting in a savings account for a rainy day. Just because that’s the average though doesn’t mean that you align with that figure.
Get this… If you’re below the age of 34 and single, you probably have under $2800.00 in savings.
No matter where you fall in the savings spectrum, if you run into an expense that exceeds the cash that you have lying around, you’re going to need to borrow money. That can become a big problem if you have bad credit.
Below, our team shares our top tips for securing a solid loan despite your credit score working against you.
1. Know Your Credit Score
Before you start exercising strategies that are intended for people that have bad credit, you need to make sure that you actually have bad credit. Even if you know for a fact that you have bad credit, it’s a good idea to know just how bad your credit is.
Checking your credit score is simple and it doesn’t need to cost you a penny.
There are a number of websites online that will pull your credit score for you instantly, and you can talk to the best money lender in Singapore. If you don’t trust those websites to check your credit, you can request credit reports directly from major credit bureaus.
Learn more about how that process works here.
2. Talk to a Credit Union
While many banks are sticklers for good credit, a lot of credit unions have products that are more lenient.
Credit unions are built by members, for members. Because of that, they are less profit focused and more help focused.
In order to join a credit union, you’ll need to find one that you can satisfy the requirements for. Typically you’re required to live, work or worship in the city in which your credit union works out of.
Once accepted into a credit union talk to a representative about loan products for bad credit and they should be able to point you in the right direction.
3. See if Friends and Family Can Help
The only lender in the world that’s likely to offer you a loan without interest is a friend or family member.
We get that borrowing money from friends and family can be hard. After all, what if you fell on hard times and couldn’t pay them back? Would it cost you your relationship?
Always take seriously the pros and cons involved with lending to family members. If you think that asking to borrow money from somebody that you know is a risk worth taking, ask away.
You may end up getting the help that you need at no cost to you.
4. Opt for a No Credit/Bad Credit Loan
If you have bad credit, did you know that there is a whole line of lending products that are tailor-made for you? It’s true!
Lenders have realized that by alienating people with troubled a borrowing history, they’re severely limiting their customer base. To bridge that gap, some lenders have products that they’ll lend to bad credit borrowers with the catch that these products carry high-interest rates.
Interest rates on loans for bad credit that you’d pull up through a loan aggregator like Bonsai Finance could be well over 28%. Understand the implications of that and borrow with caution.
5. Review Secured Loan Products
If you have property that is worth something, you could borrow against the value of that property rather than borrowing against your credit score.
These types of loans are called “secured loans” and they are a popular option among people that have bad credit or no credit.
Secured loans tend to accept a variety of property including stocks, cars, homes and more.
6. Find a Co-Signer
A co-signer can get a bank to approve you for a loan that only people with excellent credit might qualify for.
Basically what a co-signer does is they sign your loan application with you. With that signature, they tell the lender that they’ll take on your debt if you default on it.
That additional insurance means that your lender now has two guarantors on the money they’re lending out which translates into receiving a loan with a much more favorable interest rate.
Just be sure to not burn your co-signer by falling behind on payments. That’s a sure-fire way to lose a friend or a relationship with a relative.
7. Improve Your Credit Score
When you need to borrow money now, the tips above are a helpful way to make the most out of your bad credit situation. If you can wait a little bit though, the best way to broaden the number of loans that you qualify for and to save money on borrowing is to improve your credit score.
You can improve your credit score by paying down your existing debt and ceasing to miss payment due dates.
After doing that for a while, your credit score will crawl upwards and the interest rates that lenders are willing to offer you will fall down.
Wrapping Up What to Do If You Need to Borrow Money With Bad Credit
When you need to borrow money, you need to borrow money. That urgency can lead some people to do some pretty desperate things.
Fortunately, by following the tips that we just laid out for you, you can get the cash that you need without doing anything regrettable.
If you need more loan advice or would like to understand more about how to improve your credit, consider checking out more of the financial-focused content on our blog!