Bad credit hurts many Americans’ chances of getting jobs, low insurance rates, and favorable loan terms. Many people can’t even find financing at all. Here are alternative borrowing methods for people with bad credit.
1. Improving your chances of being offered traditional financial institutions’ loans
Look into the most basic, fundamental, solid, tried-and-true ways of beefing up your credit score and credit report. One of these strategies is seeking a free copy of your credit report to determine if all the debts it lists are actually yours.
In some cases, debts are credited to your identity even though you didn’t accrue them. Dispute these charges with credit bureaus immediately to improve your chances of being accepted for traditional loans.
Further, make sure that none of your credit cards hold more than 30 percent of their total available balance. In other words, if you have a credit card with a limit of $500 and you owe $300 on it, credit bureaus recognize this as a utilization percentage of 60 percent.
Pay off at least $150 on the account as soon as possible to get your credit score back in shape.
2. Look for a loan option
The best place to find a bad credit loan option is through online financial services. These companies can typically have funds deposited into the borrower’s account as soon as the next business day. In lieu of a credit score, these companies tend to look at whether or not an individual has a steady source of income and a checking account before approving their loan application. This makes this option particularly handy for those with bad credit.
3. Seek out first-timer deals at non-traditional lenders like those at check-cashing businesses
Check-cashing businesses, which fall under the umbrella of alternative financial service providers, often make small loans at high-interest rates to consumers in the form of a cash advance. Although these loans are often expensive if you allow interest to accumulate on them, they’re great if you manage to sign up for one-off deals for new customers.
If you don’t find this type of deal at secondary financial institutions like those mentioned above, keep looking. Eventually, you’ll stumble across at least one such service provider that needs to build their customer base up from scratch. Take advantage of such opportunities only if you can afford to pay them back without generating serious interest charges!
4. Seek out secured loans and offer collateral of high resale value
The higher the dollar value of the total amount of assets you own, the easier it will be to gain meaningful financing as someone with bad credit.
Even if you’re plagued with bad credit, if your valuable assets come in the form of motor vehicles, homes, jewelry, and other assets that can be readily sold for a high percentage of their original worth on a short-term basis, you could borrow an amount that is two to five times greater than the assets you pledge as collateral if they’re worth enough.
As long as you don’t have any repossession attempts on your financial history, you’ll likely be able to take out a significant loan amount.
5. Search for other lending opportunities on the World Wide Web
The more people who are involved in the provision of a loan to a prospective borrower, the higher interest rates and financing fees those financial institutions will be forced to charge in order to cover their workers’ wages and salaries.
Since online lenders don’t have to employ many workers, you should be able to secure great lending opportunities through web-based loan providers.