People with bad credit looming over their heads already know some of the problems they can face because of their credit score. It can be exceedingly difficult to apply for credit cards, get credit from businesses, and even open checking accounts if they are flagged by background systems such as ChexSystems.
What if you have bad credit and find yourself needing money in an emergency situation? Thanks to your credit struggles, you may not be able to get your hands on a credit card, so you may start considering taking out a loan. You may even find yourself wondering how possible it is to actually get a loan without putting yourself further in debt, possibly hurting your credit score even more.
On the bright side, it can be hard, but not completely impossible, to get unsecured loans for bad credit. Knowing that such options exist and knowing where to find them, however, are two completely different things. Being informed on the topic is one of the best ways to help you find the money you need, when you need it.
What is an Unsecured Loan?
The difference between an unsecured loan and a secured loan is actually pretty simple. Here are a few key differences you need to know to make it as easy as possible to understand:
- Secured loans involve the loan applicant putting up some sort of collateral to get their hands on the money they need. This can be the title to a vehicle to borrowing against the equity on their home. It is vastly important to pay secured loans back in full, on time. If you fail to do so, the creditor may be able to legally obtain whatever collateral you put up to recoup any losses on the defaulted loan.
- Unsecured loans involve no such collateral on the loan. Unsecured loans typically have higher interest rates and will impact your credit score if you fail to pay it off, but the lender will have nothing to take should you default on the loan. Usually, unsecured loans are more common for people with great credit scores.
So, How Can People With Bad Credit Scores Find Unsecured Loans?
Surely, no one is a big fan of the thought of putting up their car or part of their home as collateral when trying to get a secured loan. This type of loan is more common in people with bad credit. That doesn’t mean it is impossible for folks with bad credit to get an unsecured loan, however.
People suffering with bad credit problems can use online resources such as Let Me Bank to find lending networks that can connect them with lenders based on their credit history and qualifications. Alternatively, they can consider some of the following ideas to get an unsecured loan, even if they don’t have the best credit score.
Try To Find a Cosigner
Do you have a close friend or family member, such as a parent or sibling, who has great credit? Getting a cosigner to help out is one of the best options for people with bad credit to get their hands on the money they need through an unsecured loan. This doesn’t mean it isn’t without risks, however.
When using a cosigner, you’re going to have to consider all of the risks involved. They are going to be responsible for your loan if you aren’t able to make the payments on it, and failure to make the payments on it could harm not only your credit score, but theirs, too.
It’s a good idea to make sure you have no other possible options before you use a cosigner, because you don’t want to risk ruining your relationship (and their livelihood) should you not be able to pay off the loan.
Consider Other Avenues
There are other ways you can get a loan without having to put up collateral when you have bad credit. You could consider installment loans, which allow you to pay off your loan over time in fixed amounts per month.
There are also cash advance loans, which are usually for smaller amounts, but could help in a pinch. These loans are usually for smaller amounts of time, usually having a date to be paid back in full within several weeks to a few months.
If all else fails, you could always go the not-usually-advised route of obtaining a payday loan, as long as you are sure you can pay it back by the due date. If you do choose to go this route, make sure you are aware of the fine print, because payday loans usually include high interest rates and other fees.
Life happens, and sometimes we all need a helping hand. If you need access to a loan with bad credit, and don’t have any sort of property you can use as collateral, consider some of these options to help you get the money you need so you can handle whatever situation life has thrown at you. Just remember to pay it off in full by the due date so your credit score doesn’t get hurt further, and you’ll be just fine.