Four Loan Options That Are Perfect For Bad Credit


Before, a bad credit rating would often mean the end of the world for a person financially. Fortunately, the situation has gotten better in time and nowadays, there are a lot of options and solutions for people who have poor credit rating. You don’t need to stop living your life to the fullest and enjoy your financial freedom simply because of a past hiccup.

When it comes to loans, most major banks and financial institutions are still strict and rigid with their requirements, so getting a loan there is virtually impossible if you have bad credit. However, never fear – there are a lot of loan options that are bad credit-friendly.

Borrow from friends or family

I know most of you won’t be expecting this advice, since this is probably an obvious fact. However, it is always a good idea to ask for help from the people closest to you. Friends or relatives won’t subject you to a credit check and won’t ask for collateral (though some wise ones may ask for your phone or jewelry).

However, things can get really messy with informal borrowing. Terms might not be clear and you bridges might get burned simply because of unpaid debts. Even if you are just borrowing from friends or family, it’s always a good idea to put the terms down in writing.


Another great option is to find peer-to-peer lending services on the web. Since individuals don’t have to worry about high overhead costs like banks do, the overall interest rate and lending terms are lower and more lenient. Also, individuals tends to be less business-minded compared to lending institutions and may be more sympathetic with your situation.

Collateral and Guarantees

Usually, what a person uses as a guarantee to get a loan is their ability to pay. This ability to pay is judged based on their credit rating. So if you have poor credit rating, lenders see you as someone who might not be able to pay. So you need to put something else as a guarantee in lieu of your credit rating. You can use your home, paycheck and automobile as collateral for loans.

You can also use another person as security for the loan. These are called co-signees or guarantors. The guarantor also signs the loan agreement, and they assume financial responsibility over the loan in case you default.

Credit Unions

Credit Unions and charitable organizations are also great places to secure loans with bad credit. They are less business-minded compared to banks and more service-minded. They are more inclined to help you and see you as a human being, especially if you talk to them personally.