Get Back on Track: Six Easiest Loans to Get for Damaged Credit
Your credit score is an important number. A good credit score can make a world of difference when you want to make a large purchase like a house or a car. It’s also important when you need a small emergency loan.
When your home floods or your car breaks down unexpectedly, a personal loan can help you get back up on your feet.
However, what if you are one of the 30% of Americans who has poor credit? What do you do? Are there even any options available?
Don’t worry, there are several options available for people with damaged credit. Let’s take a look at the easiest loans to get when your credit score isn’t the most amazing.
1. Credit Union Loan
Bank loans are some of the hardest loans to get. They tend to have stringent requirements and a high credit score is one of them.
Credit unions, on the other hand, tend to be more lenient. They work pretty much like a bank. However, as non-profits, they have a bit more wiggle room. They also tend to be smaller and more community-oriented.
While you can open an account at any bank you like, credit unions have entrance requirements. It isn’t difficult to qualify, though. The requirements are simple, like living in a certain area or working in a particular profession.
Once you’re in, you can easily apply for the funds you need.
2. Home Equity Line of Credit
If you own your home and have owned it for a while, you probably have built up some equity in it. Equity simply refers to how much of your home you own.
For example, say your home is worth $300,000. You’ve been paying down your loan for a few years and you owe $270,000. That means you have $30,000 worth of equity in your home.
You can borrow against that equity by taking out a home equity line of credit. The requirements are looser and a high credit score is not necessary because you put your home equity up as collateral.
Be careful when using this credit option. If something goes wrong and you are unable to pay, your house is on the line.
3. Secured Loan
A secured loan is similar to a home equity loan in that you put up something for collateral. However, you have a lot more options for what you can use for collateral. You can use a car, boat, property, or even stocks.
Banks and other lenders are more willing to offer a secured loan when you have bad credit because they have more assurance that they won’t lose their money. If you default on the loan, they have the legal right to take ownership of whatever you used as collateral.
Just remember that you could lose whatever you offer as collateral. Be careful when choosing this loan option.
4. Payday Loans
Payday loans can be a good option when you need a small sum of money quickly. These loans often have high interest rates, but very short repayment periods.
Thus, the name. The idea is to take out the loan and pay it back with your next paycheck (or two). These days it is a simple task to find easy payday loans online, right from the comfort of your couch.
The advantage of these types of loans is that they are fast and easy to get. Many payday lenders won’t even check your credit. This means your credit score doesn’t even matter when applying for this type of loan.
Keep in mind that just because they don’t check your credit doesn’t mean that this type of loan can’t affect your credit. If you default on a payday loan, the lender will report that information to the credit reporting agencies and it will bring down your score.
5. Online Loans
The Internet has made getting your hands on needed funds quicker and easier than ever before. You can find installment loans, short-term loans, and other types of personal loans with a simple Google search.
Of course, you should always check out the reputation of the lender before doing business with them. But, in general, the process is simple, easy, and there will be money in your bank account quickly.
If you have poor credit, you can still expect the lender to offer a high interest rate. However, online lenders have less overhead to pay than lenders in a brick and mortar store. Thus, they can afford to charge a little bit less for their loan products. This is a big benefit of choosing an online lender.
6. Peer-to-Peer Lending
This is a new type of online lending that has become more popular in recent years. The peer-to-peer lending model cuts out the middle man. It is an online platform where anyone can apply for a loan and anyone can invest.
Borrowers ask for a loan and investors choose which loans they would like to help fund. On average, the lower your credit score, the higher the interest rate you’ll have to pay. But it can be a good way to get money when you need it.
The Easiest Loans to Get
There you have it. Having a low credit score might not be ideal, but it also isn’t a complete dealbreaker when you need a loan. Try the options on this list of the easiest loans to get and you’ll be sure to have the funds you need when you need them.
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