It is not easy to qualify for unsecured credit with bad credit. However, things are still popping up – you may need money to consolidate your debts, pay for a repair, or cover your tax bill.
If you can’t pledge your home (or anything else) as collateral, is there any other way to borrow money? It is possible to get a non-performing loan, even when you have bad credit. Let’s consider our options and how attractive everyone is.
Not many options, no good options
With bad credit, it’s important to understand that your options are limited; there are no attractive solutions, but there may be acceptable solutions. If you really need the money, you’ll just have to choose the option you will find the easiest to go to when you get back on your feet.
See if you can avoid using unsecured loans altogether. They tend to have the highest interest rates (there is nothing for the bank to sell) and are difficult to qualify. Consider whether you have any collateral – even if it is not homeownership – this will help encourage lenders to hand over some money.
People are often surprised to hear that they can use the car as collateral. If you have paid off a decent portion of your auto loan, it may be possible to borrow with a car title loan (try to borrow from your bank or credit union instead of a lender in merchant sales).
These loans are not perfect but are sometimes better than daily loans and supplies.
Keep in mind that you can lose your car if you don’t pay the loan. It can keep you from going back and forth to work and earn income, and your income is exactly what you need to get out of debt.
Other assets you own can also do the trick. Call several banks and credit unions and find out what they can do for you (and what the risks are if you lose your property) before embarking on an unsecured loan.
If you are going to get approval for an unsecured loan but have bad credit, it will probably only happen with the help of a co-signer. This person applies for a loan with you, promising to repay the loan if you do not. Your signatory must have good credit and sufficient income to pay off the loan.
While it may sound absolute to use a cosigner, keep in mind that your cosigner takes a great risk. They will not be able to borrow that much for themselves after they have signed it together (as they are 100% responsible for your loan, even if you are the one planning to repay it).
If they want to buy a home, it may be impossible until your loan is paid off. Your signer is on the hook if something happens and you are unable to repay the loan.
If you are unemployed or injured (or worse), lenders will go after the signer for any remaining credit balance. If the co-signer cannot afford to repay your loan, his or her loan will fall.
Unsecured loans for bad credit lenders
If you really need to borrow money, there are several options; some lenders specialize in non-performing loans to bad credit lenders.
These things should be the worst-case scenarios as you can quickly get into trouble with these loans. In some cases, you spend more on fees and interest than you borrow.
“Predatory lending” is common when consumers have poor credit because these borrowers are desperate to get a loan, and many lenders have turned them around.
Remember that you are not in a position of power when working with bad credit lenders. They have a lot more to gain from any transaction than you do – so be careful. Only work with reputable lenders and look out for deals that are too good to be true.
It is a good idea to be sure that some assignments will help you improve your credit. You can have bad credit today, but it can get better. Find out if your credit will be reported to major credit reporting companies.
If not, it won’t help you make a loan, and you’ll be in the same boat the next time you want to borrow money.
How to Find a Good Lender When You Have a Bad Credit Card? Start by looking at legitimate lenders such as local banks and credit unions, as well as big well-known websites that refer you to lenders.
If you’re out of luck, payout clothes and pawn shops are always possible, but generally a bad idea.