Having no credit or poor credit is a major stumbling block to getting a loan because you’re viewed as a high risk customer who might default and leave the lender holding a bag of worms. It’s just a fact that until you raise your credit score, you won’t fit the standard lending guidelines that traditional, big banks have to follow.
If you’ve been turned down for a loan or don’t want to get stuck paying high, subprime interest rates .
Home Equity Line of Credit :
if you have equity in your property, you could get a low-interest, tax-deductible line of credit to spend any way you like. Of course tapping your home equity puts your property in jeopardy if you can’t repay the debt. But if you have reliable income and are disciplined about paying down an equity line, it’s an inexpensive option, regardless of your credit score. Compare loans from several institutions so you know you’re getting the lowest interest rate possible before you sign the final paperwork.
Apply to Credit Unions :
Credit unions are similar to banks but are owned by their members, who typically have something in common—like working in the same industry or living in the same geographic area. Credit unions are nonprofit organizations that pass along earnings to members in the form of lower fees and higher customer service.
Peer to Peer Loan :
Peer to peer lending has been around since 2005. It’s an online platform that allows you to borrow directly from an individual instead of from an institution. Peer to peer lending is growing in popularity because it’s a streamlined process that’s a win-win for borrowers who pay low interest rates and investors who earn high interest rates.
Borrowers post a loan listing that includes the amount they want and why they want it. Investors review loan listings and choose the ones that meet their criteria. Peer to peer lenders screen all applicants and check your credit, which becomes part of your loan listing. So while your credit score is still a factor, an individual investor may be more empathetic to your situation than a traditional bank.
Preventing Bad Credit :
Having bad credit is not the end . It still may be possible for lenders to give you a loan, provided your credit score is not too low. But be aware that you may pay a higher interest rate and more fees since you are more likely to default . There are ways you can improve your credit score , such as paying down your debts, paying your bills on time, and disputing possible errors on your credit report .