When you have bad credit, getting a loan when you need one isn’t easy. Many traditional lenders won’t offer products to people who don’t meet minimum credit score requirements, so you may feel a bit financially stuck. However, there are options available for those who are struggling with a poor credit history. Here are some options to explore.
Find a Guarantor or Co-Borrower
If you prefer to find a loan from a traditional lender, then you might qualify if you add a guarantor or co-borrower. Often, these individuals are friends or family members with good credit who are willing to sign onto the loan agreement with you. Their score and history are then considered by the lending institution along with your information.
Now, this approach means the co-borrower is also on the line for loan repayment, so failing to meet your obligation can damage their credit and harm the relationship. It also affects their overall creditworthiness and may hurt their chances of securing a loan if they need one.
With those points in mind, not everyone is willing to be a guarantor or co-borrower. But, if you have a strong relationship with someone who is financially secure, it may be worth asking.
Review additional impaired credit financial assistance options.
No Interest Loan Scheme
In some cases, even individuals with bad credit may qualify for a small loan through the No Interest Loan Scheme (NILS). This program offers low-income people and families access to affordable credit to help manage essential household item expenses, healthcare items, or pay for car repairs.
To qualify, you must currently hold or be eligible for a healthcare or pension card and meet the other minimum requirements.
No Credit Check Loans
Certain lenders are willing to offer loans to individuals without running a credit check. This can be a boon for those with a bad credit history as you don’t have to worry about it affecting your eligibility. Certain information does need to be supplied, such as personal data and verifiable income amounts, but our credit score won’t be a factor.
Often, these loans are kept relatively small and may be in the form of a short-term payday loan. Additionally, they often come with high-interest rates and fees that compensate for the increased risk associated with not running a credit check. That means it’s important to review all of the terms before you take out the loan, so you fully understand how much you’ll need to repay and in what amount of time.
It’s also important to note that the activity associated with these loans will end up on your credit report. If you manage the loan well, this could improve your history and score. If not, it will further damage your credit.
Typically, these loans are expensive, so they should be considered a last resort. However, if you’re experiencing a short-term emergency and can reasonably expect you’ll be able to repay the loan in the required time, they can be a viable option for those with a bad credit history.