How to Obtain the Funding You Need Even if You Have Bad Credit
As you might already know, bad credit can truly turn your life upside down.
If you’ve been careless with your finances over the years, there is a pretty good chance that you’ve gotten yourself into debt. What’s more, your credit score might have taken a hit, too.
On average, most consumers have a credit score ranging from 300 to 850. The average score hovers around 690. If you have a low credit score, you’ll face difficulties you wouldn’t otherwise have to deal with. For example, you could have trouble securing a job. You’ll have an even tougher time getting a loan. And if you’re trying to start your own business, a lack of funding stemming from bad credit could stop you in your tracks.
The good news is that there are other options out there. Below, we will talk about how you can obtain funding even if you have poor credit.
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Review Your Credit Score Often
A lot of Americans do not check their credit scores regularly. As a matter of fact, only about 46 percent of Americans reviewed their credit score or their credit report within the past year.
Believe it or not, you really should check your credit report regularly. There may very well be erroneous information on your report. And if you find errors on your credit report, you can get them fixed fairly easily. Doing so will improve your credit score. But if you don’t check, you might never know about those errors.
This might not get the you all the money you need, but it could ease the way toward getting the loan you’re after.
Use a Home Equity Line of Credit
Depending on the your current situation, you might be able to obtain a loan by using your home.
A home equity line of credit will give you a tax-deductible line of credit with a low interest rate. You’ll be able to spend the funds however you see fit.
Of course, there are some risks involved. If you can’t pay back the debt within a sufficient period of time, your home would be in jeopardy. However, this is an inexpensive option that can work well for you if you take precautions and pay your bills on time.
Consider a Peer-to-Peer Loan
You might be able to take advantage of a peer-to-peer, or P2P, loan. This type of lending has been around since 2005, and it has grown in popularity in recent years.
A peer-to-peer loan takes place primarily online. Basically, you simply borrow money from another individual instead of from an institution.
Interest rates can vary widely, but some P2P loans come with rates as low as 6 percent. Both lender and borrower can benefit from these arrangements. As a matter of fact, some lenders enjoy a return percentage in the double digits.
What About Payday Loans?
Depending on the situation at hand, you might be able to obtain a payday loan, even with bad credit. This type of loan is not a viable option for everyone. However, for many people it is their best option.
Payday loans are primarily designed to help people only for a short period of time. Therefore, if you take out one of these loans, remember that you must pay it back promptly.
While payday loans have received a lot of criticism in recent years, they can be beneficial for some people, especially those with bad credit. However, as long as you move forward cautiously and make your payments on time, you’ll get the benefits without the negatives.
Borrow from Family
Most people know—or are related to—someone who has a little money. If this is true for you, maybe you could borrow the money you need from your loved ones.
This is definitely a great option, since most family members will happily provide a relative with a loan without imposing hefty interest rates. In fact, some will be happy to give a loan without imposing any interest whatsoever.
Therefore, if you need extra funding for your fledgling business or some other worthy cause, you should definitely consult with a relative first, before you try to obtain a loan from a lending institution.