If you’re dealing with a bad credit history, you’ll find that getting a loan is both more difficult and expensive.
But the good news is that there’s lots of places you can go to get a loan with bad credit.
We lay out for you all the places where you can get bad credit loans.
If you have bad credit, your credit report has listings that show you’ve either missed repayments, made defaults on your home loan, taken out a Debt Agreement or filed for bankruptcy (or a combination of these).
Unfortunately, having bad credit makes you a “high risk” borrower, and therefore less likely to be approved for future credit applications with major banks and lenders.
However, if you need a loan when you have bad credit, you do still have options.
Why You Might Need a Bad Credit Loan
Bad credit loans are a short- to medium-term fix, to assist you while you also work on improving your credit status.
So if you want to get into the real estate market, or require a personal loan, a bad credit loan might be the answer.
Where to Get a Bad Credit Loan
Family and friends: Sometimes, those closest to you are your best sources of funds.
However, it’s important to treat any loan from someone you know just as if it were a formal business transaction, with documentation.
Not repaying a loan to a relative or friend could wreak more havoc than having a bad credit report.
Peer-to-peer lending: This is a relatively new form of lending, on an online platform which allows you to borrow directly from another individual rather than an institution.
While your credit score is still a factor, it’s up to the individual investor as to whether they wish to make the loan.
Credit unions: Credit unions are similar to commercial banks, with the difference that they are owned by their members rather than by profit-seeking shareholders.
They may be willing to look beyond a poor credit history in determining whether to approve an application.
Banks that don’t use credit scoring: While the majority of lenders use the computer-based system of credit scoring to assess your lending eligibility, there are some that don’t.
This means that it is a human who will evaluate your personal situation to make the decision as to whether to make the loan.
Specialist non-conforming lenders: More flexible than the major banks, these specialist lenders also make a case-by-case assessment in determining borrowing eligibility.
While in most instances loan applications will be approved, your credit score does come into play: the higher the risk of your loan, the higher the interest rate.
These loans in particular are good as an interim measure until your credit score improves.
Debt consolidation companies: Debt consolidation companies work with individuals who are looking to improve their financial situation, every day.
If you are looking for a loan to get out of debt, find a debt consolidation company who can show you debt consolidation loan options — these will vary depending on your personal circumstances.