I Have Bad Credit How Do I Get a Loan?
This is a question I get asked many times over the years, and my answer or answers are still the same. There are ways to get a loan with bad or poor credit, more importantly a low credit score. But you first have to deal with the low credit score or bad credit issue.
Your Credit Report and Credit Score
The first port of call here is to get a copy of your credit report and credit score and look it over for any errors or omissions. You need to know your credit score if you are to try and improve it, and also know why it may be low.
You can find ways to improve your credit score here.
If you find mistakes or errors in your credit report, there are ways to correct this. You can either contact the creditor in question to inquire about having them correct the error, or you can also contact the credit bureau(s) reporting the error and use their procedure to correct errors.
If you have open accounts that are arrears or you have defaulted on, and they still have a balance owed on them, this can be a huge issue. These accounts may show as open with a balance, and you are not paying them. Asking a lender for a loan, while you still owe on other accounts in default, will present an issue in trying get a new loan. These older accounts need to be resolved and paid.
Options For Bad Credit Loans
Even with a low credit score, you can still get a loan, but the interest rates will be higher due to the risk to the lender.
Get a Guarantor/Co-Signer: One of the first options in getting a loan with bad credit is to have a guarantor. This is someone you know, a family member or close friend, who signs on the loan with you, in essence stating if you do not pay the loan or make the monthly payments, they will pay the loan.
Pledge an Asset: This is where you have an asset, something of value, and you use it as collateral in order to be approved for a loan. This asset can be almost anything of value, but most banks like property, and as we will see below, a car of value can be used to secure a loan as well.
There are some lenders that will look at unique items of value to be used as collateral for a loan, such as an expensive wine collection, antiques, jewellery, etc. However, property with equity is a very strong asset for collateral.
Log Book Loans: As mention before, you can use a car or vehicle to secure a loan if you have poor or bad credit. A log book loan is a loan secured against your vehicle. You need to have a vehicle of a certain value. These loans have a high interest rate, as do all bad credit loans, and should you fail to repay the loan, you could lose your car or vehicle.
It is not impossible to get a loan with bad credit, but you first need to know your credit history and credit score, in addition to curing what caused you to have bad credit in the first place.