Having a bad credit score is not the end of the world – although it can make your life much more difficult until you fix it. There are still various options you can use when you’re in this kind of situation, and it’s important to be aware of them so you can avoid making a mistake in a state of panic. In the end, you should come to terms with the fact that you’ll have to pay a higher interest rate or deal with otherwise unfavourable conditions.
But compared to not having any access to money at all, it’s still something. And if you are determined enough, you should be able to eventually fix your credit score and restore it to a good state that allows you to operate more efficiently. Until then, here are some options you can consider.
Bad Credit Loan
A bad credit loan is just what the name implies – a product designed for people in a situation like yours, who don’t have access to any better offers on the financial market. Bad credit loans typically come with some conditions that make them worse than regular ones, such as a higher interest rate. On the other hand, the approval process is easier and more streamlined compared to an ordinary loan, and you can expect to have the money in your hands much sooner.
Payday loans are another popular option among people with bad credit. They’re designed to be paid off on a very short term – typically a month or less – hence the name. A payday loan does not necessarily have to be tied to your actual pay check, although some lenders will look at how much you’re earning to determine your upper borrowing limit. This can be inconvenient if you have no way of proving your income at the moment, so plan ahead for that and make sure that you can bring something to the table when talking to a lender.
This is not a product available on the financial market. Rather, it refers to a loan you can take out from a friend or family member. As you’re probably guessing, these loans can have more favourable terms than traditional ones, but they’re also not universally available. Borrowing money like that can also come with certain additional implications which might not be very pleasant to you.
The mere idea of asking for money can be shameful to some people, but it’s something you’ll have to deal with if you want to get out of a tough financial situation and have no other options available. And in the end, most people will be more understanding than you might assume, especially if they’ve gone through something similar in the past themselves.
Do you have anything of value? This can change the context a lot when taking out a loan. A secured loan can provide you with access to much better conditions than an unsecured one despite your bad credit score. Of course, there’s a limit to how useful this can be to you. Assets like your car and home are generally the most valuable ones you have, but putting them up as collateral for a loan can come with a severe risk attached. It’s something you definitely don’t want to do without a very careful consideration, and it’s only a good idea if you have no other options available.
Still, a secured loan can give you access to the conditions you need in a difficult situation, and it might be your only option if you need to borrow a larger sum of money. On the bright side, as long as you have the ability to pay back what you owe, it doesn’t have to be such a troubling prospect.
This might not sound like a direct tip, but it’s actually an important point to consider. Many people in a situation where they need to borrow money on an emergency basis only focus on acquiring more cash and rarely pay attention to the other side of the coin – reducing how much they’re spending. This can make it much easier to deal with an unfavourable loan for a brief period of time if it comes to that, so it’s definitely not something you should ignore. And while it’s true that everyone’s situation is different and it can be difficult to say exactly which expenses you can easily cut out, it’s still worth taking a look and giving it some thought. You might even fix something with your finances in the long run if you discover that you could have reduced your expenses in some minor way all along!