Desperate for a loan with bad credit

The recent recession-induced job losses had put a lot of people in bad credit. Tristan is one and she’s asking where to get a loan with bad credit now.

“I used to have a clean slate until two years ago when I lost my clerical job. I was unable to pay my loan for three months. But now that I’m back with a good job and having paid up my past debts, I’m finding it hard to take out another loan because of my bad credit. I’m wondering where to get a loan with bad credit. Is there a direct lender willing to give loans even to borrowers like me? – Tristan, OH

Admittedly it will take you some time to recover from a bad credit score and, ironically, you’ll need more loans to put your credit back in shape. But how to do that when lenders are shying away, right? You have some options, where getting a loan–like the kind of fast loans they lend in the UK or Canada–may be fast and easy even for people with bad credit. Just make sure to pay back on time to slowly build your credit again.

Use the home or car as equity

Use the home or car as equity to secure a loan. A direct lender will be more willing to give you loan approval if he has a security blanket. In case you default, he can recover the loan from the equity. Of course, the biggest drawback with this strategy is that you might lose the house or car. Only put your house or car on the firing range if you desperately need the loan and that you can pay it back on time.

Join credit unions

Another credit option where to get a loan with bad credit is to check your city or town for credit unions. In some areas they’re called cooperatives simply because the lending company is owned by the borrowers. Credit cooperatives have more lenient requirements than mainstream lenders like banks. They rely more on your initial cash outlay to become a member than your past credit record. Here’s how it works—each member owner will be asked to deposit cash like in a savings account. The savings entitles members to take out a loan subject to limits and frequency set by the union. If your deposit is small, your loan limit will be small, too. Credit unions are the closest thing to lending from a bank in your case. The interest is permissible and, better yet, your cash is earning dividends since you co-own the lending cooperative. The drawback is you need cash before you can take out a loan.

Apply for online loans

Many lenders are offering online loans for people with bad credit. As long as you have a steady income like your job and bank account, the approval process is often quick. Like credit cooperatives, online lenders are more interested if you have the money to pay the loan in the next few months, instead of reviewing your historical credit performance. You’ll be asked to fill up an online application form with your personal, work and bank data and the loan is transferred to your account. Does it sound too good? The drawback is the interest and penalties are stiff. Make sure to pay this type of loan on time to avoid being charged for more fees. Take this quick online test by the American Association of Retired Persons to see how well you stack up with this type of loan.

Ask family or friend

You can also try asking for a loan from family and friends, especially if the loan is small. These people will be more lenient and easy to deal with than a direct lender. The drawback is if you fail to pay back your relationship will suffer. Not the least, taking out a loan from someone you know may put you in a less than dignified situation.

CONCLUSION

These tips are some of the better alternatives where to get a loan with bad credit. Whichever you take make sure to pay back on time to gradually put your credit score back in shape.

Interesting facts

• Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g...
• Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment and a verifiable credit history. It is designed not only to support entrepreneurship and alleviate poverty, but also in many cases to empower women and uplift entire communities by extension. In many...