Only a few things make you feel like the world is ganging up against you more than having bad credit and desperate to access a loan for your business or personal use. If this sounds like your current situation, calm down as we are about to show you five simple ways to work around this problem.
A caveat here, though, is that most of these tips will not guarantee instant results, but if you keep taking the small and consistent actions we recommend, you should soon be able to qualify for loans even with the bad credit. We also recommend that you check out Crediful for additional tips for managing your finances.
Review your credit reports
The very first step you should take is to try and understand where your finances stand and how much you owe past credit providers. This means looking for your credit reports and finding out more about your current credit score. If you notice some errors or false-negative marks, this is a great time to dispute and get them removed. The idea is to look for anything that positively impacts your overall credit score and ultimately increases your chances of accessing higher credit.
Strive to improve your score
Now that you have a clearer picture of what your credit report looks like, it’s time to find ways to improve your profile. Begin by targeting all the key factors that contribute towards credit health, including your payment history, length of credit history, and credit usage. One of the most practical methods you can use here is to mend broken relationships with current creditors by paying off bad debts quickly. Besides, try to keep your debts levels low and do not make a mistake of closing your credit accounts, especially if they can help to prove to future creditors that you paid off your debts.
Choose your loans wisely
Even with bad credit, you might still be able to access loans from some creditors. Unfortunately, these loans often come at a steep price in the form of high-interest rates and stringent terms. At this point, it makes sense to weigh your options very carefully to avoid committing yourself to another loan that could potentially worsen your already terrible financial health.
For starters, avoid credit facilities that come with unreasonable terms such as payday loans and auto title loans. Most of these loans have high origination fees, high-interest rates, and very short terms that will most obviously harm your finances even more.
If you have to take a loan with bad credit, then go for friendlier ones that look beyond the credit score. For example, you may consider applying for a secured loan, whereby all you need is to provide collateral like your car, home equipment, or even your home. You can also choose to go for personal installment lenders, especially if it’s an emergency case. The only thing you need to do is to avoid short-term, high-interest loans that put you at risk of getting into more losses.
Go for a co-signer
A co-signer, just as the name suggests, is someone with a better credit rating than yours and who knows and trusts that you will repay a loan once they take it on your behalf. Most creditors accept this kind of arrangement as it assures them that they’ll get their money back should you fail to honor your agreement with them.
Usually, the amount of loan you get depends on the credit score of the co-signer, so be sure to get someone who qualifies for the amount you need. Worth mentioning here is that both you and the co-signer are responsible for paying the loan amount, so strive to make timely payments to avoid transferring any unfair burden to them.
Join a credit union
Credit unions often accommodate customers with bad credit, and can therefore be an excellent option to consider when you want to take loans. Unlike banks and many other financial institutions, credit unions take into consideration many other factors apart from your credit score when giving you a loan. All you need to get considered is to be an active member while you might also need to prove to them that your financial health has improved in recent months or weeks. Most trade unions then consider other aspects like where you work, your residence, or even where you attend school to determine your creditworthiness.
Are you finding it difficult to access loans from creditors due to your bad credit profile? What are you doing to reclaim your creditworthiness? We’d love to hear your feedback.
