Wednesday, 3 Jun 2020
Finance

How to Borrow Money with Bad Credit and Debt

When you have bad credit, or no credit history at all, it instantly becomes more difficult for you to get approved for a loan. Financial institutions will look at your credit history, and if they decide that lending you money would be too high of a risk for them, they will reject your application to borrow money.

What can you do if you need to borrow some money, but can’t get a loan from a bank or another traditional lender? Fortunately, you have some options on how to borrow money even with bad credit and debt in tow.

Here are nine options on how to borrow money with bad credit and debt:

1. Check your credit score and your credit report

The first thing you should do is check your credit score and your credit report, if you haven’t already. It could help you understand why your credit history prevents you from getting the loans you need, and could help you find a solution.

You can request your credit report for free, from Equifax and TransUnion. Rest assured that asking to see your report will not negatively affect your credit score.

2. Borrow money from friends or family

If you only need to borrow a small amount of money, and you know you’ll be able to repay it quickly, you could be able to borrow from a friend or a member of your family. This is the best way to borrow money with bad credit if you just need a small amount of cash.

If someone you know agrees to lending you some money, make sure you get the details of your agreement in writing to avoid bad surprises for both of you.

3. Ask someone you know to co-sign a loan with you

Another solution would be to find someone who will want to co-sign a loan with you. By doing this, they would be telling your financial institution that they believe you will be able to repay your loan.

Be sure you are worthy of your co-signer’s trust, because if you can’t repay your loan as you are supposed to, it could lower their credit score as well.

4. Stop applying for a loan from traditional lenders

If no one can co-sign a loan with you, and your application has been rejected by your bank, you should not try to apply for a loan from other banks and other traditional lenders. You will not be able to borrow money with bad credit this way.

Your rejected application will show up on your credit report, and will certainly not help you convince another lender that they should give you the loan you want.

5. Borrow money from a secured loan

Applying for a secured loan could be another option. A secured loan is when you borrow money against something that you own. A common example of a secured loan is a vehicle title loan, which allows you to borrow money with your car, but a house can also be used as collateral.

Your asset will be held as collateral if ever you fail to repay your loan. Because of this, secured loans often have lower interest rates than traditional personal loans.

6. Borrow money from a payday loan

Payday loans are loans that should only be considered for a short-term use, due to their high interest rates. This type of loan allows you to borrow money with bad credit, and to repay it when you get your next paycheck.

Payday loans are not ideal for any situation, but if you find that they could work just fine for you, research your options.

7. Borrow money from a bad credit loan

Some lenders are offering loans specifically designed for people who have bad credit. These bad credit loans have good interest rates, and they can help you slowly rebuild your credit.

There are many bad credit loan options out there, so make sure you deal with a reputable lender, and that the terms of the loan seem reasonable to you before you apply for one.

8. Borrow a loan from a credit union

If you can’t get a loan from your bank, maybe you could get one from a credit union. A credit union could be a great way for how to get money with bad credit. Unlike a bank, a credit union is a not-for-profit organization that is owned by its members, and focused on their needs.

Since a credit union is not required to pay taxes, they can agree to lending money to borrowers who are rejected by banks. It’s worth comparing the rates of credit unions in your area, and asking for a loan.

9. Work on rebuilding a good credit score

Maybe you’re having some trouble getting approved for a loan now, but it will become easier eventually if you can improve your credit score. Getting a loan from an alternative lender and repaying it on time is a good way to rebuild your score, but there are other things you can do.

You should also make sure to pay all your bills on time, pay attention to your credit card balances, and alert your bank and your credit card company if you are about to move, to make sure your bills won’t go unpaid just because you never received them.