If you are one of the millions of people walking around today with a bad credit rating, you may well be wondering how you'll ever be able to get a loan again in the future. Well wonder no longer. If you need a loan and have bad credit, the following are some of the alternatives currently available to you:
Bad credit personal loans
Although you may have been told that having bad credit debars you from applying for a loan, this is in fact a myth. Indeed, there are a large number of lenders willing to lend money to those they consider 'credit risks'. The only problem that you'll have to contend with is the fact that the amount of the loan may not be as much as you would otherwise have liked it to be and you may well end up having to pay a higher interest rate - as you'll be seen as a higher credit risk!
Even though you have bad credit, with the intense competition there is these days among credit card providers, you should able to get a bad credit rating credit card. That said, be prepared for a couple of shocks:
First, you may be asked to apply for a secured credit card. In short, a secured credit card means you agree to provide the credit card provider with security over the credit card limit. Practically, this means you have to give them a cash deposit to cover any expense you incur. While this is very burdensome on you, it is also an ideal way to start to rebuild your credit rating.
Second, even if you are not asked to provide security, the limit on your credit card is not likely going to be anywhere near what you were used to in the days before you had a bad credit rating. In part, the reason for this is to ensure you can make the minimum repayments.
Third, be expected to pay a higher rate of interest than would have been the case when you had a mainstream credit card. Nonetheless, with the lower credit limit, you really should be looking to repay your bad credit credit card in full each month.
Pay day loans
When all else fails, you can apply for a pay day loan. In short, pay day loans are a new concept offered by lenders predominantly advertising on the internet who agree to provide you with a short term loan until you receive your next pay check. In order to be able to apply for a pay day loan, you need to evidence that you receive a salary and have a current checking account. You do not need to comply with any credit rating check as a credit rating check is not undertaken - thus making it an ideal short-term loan for those who have a bad credit rating. That said, pay day loans do attract high fees and so they are not generally considered a wise move in any long term debt management plans.
Bad credit mortgages
As with all other types of bad credit loans, some lenders are willing to provide bad credit rating mortgages. However, be warned that you'll likely need to have some savings as most bad credit rating mortgage providers expect borrowers to invest up to 20% of the purchase price of the property themselves, i.e., they'll not likely lend you any more than 80% of what they believe the appraised value of the property is.
Finally, keep in mind that just because you have a bad credit rating does not necessarily mean the whole world does. So if you have a relative or friend who has a good credit rating, and they are willing to lend money to you, this could be a very cost efficient way for you to borrow money. Nevertheless, generally borrowing money from family and friends is not overly recommended as it does put certain strains on relationships if you fail to repay them, or if you believe that repaying other debtors before them is more important.
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