If you have a poor credit score, you may have found it challenging to get approved for loans or financial products. When looking for a direct lender, finding a company that can offer you a reasonable monthly payment and manageable interest rate is essential. Repayment terms that fit your goals should also be a priority. If you’ve been wondering “who will give me a loan when no one else will?” then you’ve come to the right place!
It’s important to keep in mind that having a low credit score, may lead to limited options for trustworthy lenders. But don’t fret, there are safe options out there.
Credit check loans based on financial history can make it highly stressful for people with poor credit scores to find money. People with bad credit scores may find that certain lenders won’t approve them. A traditional bank or credit union may be unwilling to grant emergency loans to people with a bad credit score since these kinds of applicants are considered high risk. But, know that if you have a poor credit score, there are still small loan options available.
While it can be easier to get a loan when you have a higher credit score or steady income, there are still plenty of ways to get the cash you need for those times when there’s just not enough in your savings account.
What Are My Options for Bad Credit Loans?
Suppose you’re dealing with a series of unexpected expenses. Or maybe you lost your job and can’t pay bills. In that case, you’re probably looking for a quick short-term loan to put some extra cash in your bank account. Thankfully, those with bad credit scores have a few different loan options:
Online Personal Installment Loans
Short-term personal loans could be a great option for getting a loan without a good credit score. Personal loans can come with convenient monthly payments and personalized loan terms. This convenience can make personal installment loans a great funding solution for people looking to consolidate credit card debt and work with reliable lenders.
Personal loans can also come with fixed interest rates. This means you don’t have to worry about your emergency loan monthly payments changing on you every month.
Peer-to-Peer Lending
Instead of offering emergency loans directly, there are loan companies that simply connect borrowers to online lenders who can offer loan terms and interest rates that fit their unique financial situation.
However, these places usually require a credit report, so you may not be paired with your preferred lender unless you have good credit.
Car Title Loans
Some bad-credit borrowers turn to title loans. How much money you could get with this type of bad credit loan depends on the equity in your vehicle and your source of steady income. However, before you sign your contract, take a good look at your title loan agreement. If you fail to make payments on your title loan, your lender could not only charge you extra loan fees but they can also repossess your vehicle.
The risk of losing your only mode of transportation makes these secured loans a very risky option.
Borrow Money From a Friend or Family Member
Suppose you don’t want to deal with financial institutions at all. In that case, you could consider asking a trusted friend or close family member for a short line of credit. Be careful when choosing this option instead of going with an actual lender, however.
While a friend may not charge you origination fees or require a high credit score, mixing finances into a personal relationship is a serious decision. You may want to consider a no-credit-check loan option. Another alternative would be to ask your employer for a paycheck advance.
Alternatives to Credit Check Online Loans
If you have bad credit, you may be looking for a way to get emergency loans without having to go through a credit check. No-credit-check loan options like pawning something or getting a cash advance don’t require a credit score at all. Also, they can be a way to get the cash you need if you’re having trouble finding loan approval.
Pawnshop Loans
If you’re looking to get a short term loan without a savings account or having to give anybody your bank account information, you might be considering a pawn loan. An alternative to a credit line and online lenders, pawn loans are a way to get money in exchange for a valuable piece of property.
Depending on the value of the item you intend on offering to the pawnshop, a pawn loan pretty much comes with guaranteed approval. But, be willing to part with whatever you offer for your pawn loan because if you don’t repay the loan, they can sell your item.
Payday Loans
Another type of emergency loan that almost always comes with guaranteed approval is a payday loan. However, before you choose a risky loan like this, make sure you have enough money to pay back your emergency loan within a week or so. Otherwise, you could be stuck with astronomical interest rates that make staying out of debt extremely difficult.
Credit Card Cash Advance
If you have a credit card, you may want to consider using it for your financial needs instead of looking into different lenders for a loan. Instead of going with a bank or credit union, your credit card could allow you to get the cash advance loans you need without having to go through credit checks. Be careful with the interest rates on a credit card, though; they can easily cause your balance to get out of control, making you fall deeper into debt.
Payday Loans vs. A Personal Loan: What’s Better for Bad Credit Scores?
Two of the most popular ways for people to get emergency loans with bad credit are a payday loan or a personal loan. While these kinds of loans don’t require a great credit history to get guaranteed approval, there are some significant differences you should be aware of.
Looking at the loan terms, you could get a much better deal if you went with a personal loan. Payday loans usually require the borrower to pay back their loan in full at the time of their next paycheck. Suppose you don’t pay back your payday loan in full within a relatively short period of time. In that case, extremely high-interest rates could kick in and make your payments even harder to keep up with. When you’re already in the middle of a financial crisis trying to get a loan, the last thing you want to deal with is a loan that makes your life more difficult.
Personal loans, on the other hand, can come with much more reasonable terms and rates. Even with a less-than-perfect credit score, you can still get a great deal on a personal loan when you work with the right lender. Such lenders will look at your personal financial situation and give you terms and rates on your bad credit loan that work for your budget.
Because of the competitive rates and manageable terms they can offer, people looking for emergency loans with bad credit often turn to private personal lenders.
How Will Personal Loans Affect My Credit Score?
Essentially, taking out any sort of loan has the ability to affect your credit score, including funding from private personal lenders. In general, the major credit bureaus use five different factors to determine a person’s credit score. These are credit history, amounts owed, length of credit, kinds of credit, and newly acquired credit.
When you get a personal loan, online lenders will do what is called a hard credit check. A hard credit check has the potential to affect the newly acquired credit category that contributes to your credit score. Apply for too many loans without receiving approval and the hard credit checks can start to have a negative effect on your credit history. That’s why you want to make sure you go with a personal lender who understands the financial situation that you’re in.
Furthermore, when you are approved for your personal loan and make payments on it, you’ll begin to establish a payment history. If you stay on top of paying back your loan and don’t miss any payments, your payment history could start to affect your credit score positively! Also, since lenders charge late fees when you repeatedly miss payments, you’ll be keeping more money in your bank account when you make all your loan payments on time.
If you can build your credit score over time, learn how to stop overspending, and manage your finances wisely, you’ll end up with more options for loans in the future.
When it feels like no one will give you a loan, rest assured that there are financial options available.And if you’re in a real financial bind, consider some of these emergency hardship financial aid options!
