A bad credit rating can severely limit your options when looking for financing from creditors. Low credit ratings typically arise from your past dealings with creditors. If you have defaulted on a loan in the past or you are serially late in making repayments to creditors,your credit rating can take a hit. With a bad credit score,getting financing from established lenders can be daunting. If you are lucky enough to find a lender willing to offer a loan,you will no doubt be charged exorbitant rates. Although it does not mean that you cannot get a loan to meet your expenses. There are various lenders and brokers online that offer bad credit loans such as www.moneytrumpet.co.uk/bad-credit-loans/ If you have a bad credit score,this article will discuss some borrowing options you can explore when looking for a loan.
If you are a formal employee of a company,you should consider approaching a credit union for financing. Credit unions that are affiliated with your employer can in most instances disregard your low credit score especially if you have good character and have a regular pay check where the union can deduct payments for your loan.
Another great place to seek financing is from Peer to Peer (P2P) lenders. P2P lending refers to a group of individuals who contribute funds and offer them to borrowers through online platforms. To get funding from this source,you will have to put up an online application detailing why you need money. P2P lenders will then review your application and decide if your application has merit before funding your loan.
If you cannot find established lenders,you can also seek funding from close family and friends. This is a great borrowing option since people close to you may understand your plight and offer financial assistance more easily. Further,you are more likely to get great repayment terms from friends and family.
You can also get financing with bad credit by putting up collateral when taking a loan. For example,you can use assets such as your car or house as security to receive funding from financial institutions. Should you choose this option,ensure that you are able to repay your loan to avoid losing the assets you put up as security to your creditor.
You can also get unsecured funding from unauthorised lenders such as shylocks. However,these loans are usually expensive. Alternatively,you can also get funding with bad credit if you can find a person with a high credit rating to co-sign your loan application. A person with a great rating can boost your score hence enabling you to get the funding you need.
Borrowing loans with a bad credit score has its advantages and disadvantages. Some of the key benefits include:
â¢ These loans are usually processed more easily and quickly
â¢ Lenders often have very lenient repayment terms such as flexible repayment terms
â¢ There are many lending options to choose from
â¢ If you are able to secure a loan with bad credit and make timely repayments,you can gradually improve your credit score
However,as stated earlier,bad credit loans also have their limitations. Some of the disadvantages include:
â¢ Lenders who offer bad credit loans often have very steep interest rates
â¢ Sometimes,you may be asked to provide collateral which you can lose in case you default on loan repayment
â¢ Unlicensed lenders often use brutal tactics in asking for repayment when you are late in meeting your obligations