Did you have been knocked out of your credit score due to the excessive financial challenges that you have been going through? If answered yes, you must be going through a tough time to obtaining new lines of credit. Well, the current lending industry is entirely dependent on credit and without a good score, it is almost impossible to grab a loan with a reasonable interest rate. Lenders may tell you that it is extremely difficult to get a personal loan when you have a poor credit score but does that mean that it is impossible to get a loan to meet your financial needs? Read on the concerns of this article to know more on this.
The alternatives for poor credit borrowers
Having poor credit score is indeed a big obstacle to getting a personal loan as lenders view you as a high-risk borrower who might default on the loan repayments. Yes, it is true that the lenders see their own risk while lending loans to a borrower with poor credit score. This doesn’t at all mean that you can’t get a loan with a bad score. Nevertheless, if you’re turned down by a lender for poor credit score, there are various alternative options that you may seek help of.
- Utilize a home equity line of credit: After the housing bubble, there were many homeowners who were left owing more than the actual worth of their home. But in case you have enough equity stored in your property, you can easily get a secured personal loan from Newcastle Permanent Building Society or other lenders, if you’re cash-strapped but house-rich. Of course when you tap the equity accumulated in your home, you risk losing your home in the event of non-repayment of debt, but you can definitely avoid that by making timely payments.
- Apply loan from credit unions: Credit unions are almost similar to banks but the only difference is that they’re owned by their owners who work in the same union and live within the same geographical area. Credit unions are non-profit agencies which pass down their earnings to members in the form of higher customer service and lower fees. You can even use artificial intelligence tools for credit unions to compare different unions so you can make sure you are using the one most suitable for you. When you’re turned down by other lenders due to poor score, you can turn to credit unions.
- Get peer to peer loans: P2P lending or peer-to-peer loans have been around since 2005 and this is an online platform which borrows directly from people instead of an institution. This is a win-win situation for borrowers and hence peer-to-peer lending is gradually growing in popularity. Now you can borrow for 6.5% and earn a return of 10.5% which sounds pretty impressive.
Therefore, you can still get personal loans within your reach. Just take into account the above mentioned alternative options and use them in accordance with your present financial situation. Whatever may be your situation, make sure you manage your finances in the best way possible to repay the loan on time.