By having a poor credit history, you significantly limit your borrowing options. Banks don’t like lending to risky borrowers, and if your credit history is bad, you’ll be considered risky. There are other options open to you though, here are the best.
Find Someone to Co-Sign on a Loan
If your credit is so bad that you can’t take out a loan by yourself, see if a friend or family member will co-sign a loan with you. This is when they act as backup if you fail to make the repayments on the loan. Therefore, it will have to be someone who knows you well and trusts you. You’ll have to be willing to let them look at your finances, and you should be able to assure them that you will make the repayments on the loan.
This is a good option if you have the means to repay the loan, but your poor credit history is holding you back. The other option would be to borrow directly from a close friend or family member. This is a risky option though because you don’t want money issues to ruin relationships.
Borrow Based on Asset Value
Some lenders won’t even take your credit history into consideration when they offer you a loan. This is ideal for those of you with a bad credit history. There are certain other things that they will look at instead of your credit history though. You can get hard money loans that focus on the value of your assets instead of your credit history, for example.
This is useful if you’re looking to borrow money in order to undertake a big project like a building job. You could potentially take out the loan against the value of the property you build. The interest rates tend to be more favourable too.
Peer to Peer Lending
One of the more interesting and innovative advances to develop online over the past decade is peer to peer money lending. If you’ve never heard of it before, peer to peer lending is pretty self-explanatory. You post the amount of money you want and why you want it online, and then investors and lenders can browse the listings.
Because the lenders are individuals rather than banks, they’ll be a lot more flexible when it comes to the issue of your credit history. It might still be a factor for some lenders, but not for all of them. You will also be able to find great interest rates. They’re much better than those you’ll find at banks. Just make sure you do your research before borrowing.
Improve Your Credit Score
Your final option is to improve your credit score. This isn’t the best option if you need money quickly, but if you’re thinking about the long-term, you should definitely look at how you can improve it. You should make sure your credit file is up to date and make sure you make any standing loan repayments on time to improve your credit score.
Having a bad credit history can feel like a terrible burden and restriction on you. But it doesn’t need to be as limiting as you might think.