We need funds to start our business, buy a house and for many different purposes. Money is always a need to do something great. But it makes us hard to get a loan when we have a bad credit score. One of the best things to do when we have a bad score is to borrow from friends and family. Credit score doesn’t matter when we ask for support with our relative which makes it easier to get the money and give back when you can.
What is credit score?
A Credit score is a number which is based on your credit payback evaluation. In simple words, it is the reputation you have build with the banks after getting a loan from them.
Better the score more easily you can get the loan. Lower the credit number higher the interest rate and decreases the chance of getting loans.
This is how general credit score looks like:
- Excellent/very good credit score: 700 to 850
- Good credit score: 680 to 699 (Average American score is 682)
- Average/OK credit score: 620 to 679
- Low credit score: 580 to 619
- Poor credit score: 500 to 579
- Bad credit score: 300 to 499
Bad Credit Loans are often hard to get but not impossible. Here are the 3 ways to get a loan with bad credit score:
- P2P Lenders
P2P means peer-2-peer which is an online money lending service. This one of the popular way individual can get money with bad credit score. There are many websites across on the internet which allow loan transfer from person to person. One of the things to note is “P2P” system might sound easier but the interest rate charged by investors can be from 25% to 37%. If you are not willing to get involved with banks or credit union paperwork then this option can be useful for you as it is made from individual to individual.
- Cosigned Loan
If Peer-2-Peer option didn’t work then Cosigned loan will be another fit for you. Most of us want to have a good reputation in every field we work. Likewise we also want to pay back our loan and interest on right time but due different circumstances we are not able to. Which gives us bad credit score for borrowing loan. If you are a trustworthy person the cosigned loan will be the best fit. To get a loan with Cosign you just need to find someone with good credit score. This will also help you to get lower interest rate.
One thing to note before getting the cosigned loan is that if you are not able to pay back at the right time this will give bad credit score to both (You and Cosign partner).
- Bad Credit Loan
You might agree many people struggle to pay their interest rate even they have a good credit score. Banks constantly make money from us. Bad credit loan is not the best option but if there is no choice we have to get it anyways. As you might have acknowledged the fact that you got a bad score because you didn’t pay back on time. This cause the bank to trust you less and charge you higher interest in the name of risk management.