It's becoming increasingly difficult to get a loan in some areas, even if you do have good credit. Recent laws have been put in place that make it harder for lenders to make loans, and lenders have also become more wary about making loans to people without excellent credit histories. Fortunately, just because a lot of people with bad credit are struggling to get loans doesn't mean you have to struggle.
Understanding Why Bad Credit is Such a Big Problem
Bad credit is a big issue because your credit rating provides a lot of information to would-be lenders about how successful you generally are at paying back loans. Most lenders think that the better your credit score, the more likely you are to pay back your loans.
Trying Credit Unions
Sometimes small credit unions are a little more willing to make loans to individuals with bad credit than large banks. They typically don't have as many customers as large banks and may be willing to spend more time listening to your arguments about why they should make a loan out to you.
Unfortunately, if you have a really bad credit history, it is unlikely that even credit unions will be interested in making a loan out to you. Even though they are generally not quite as strict as banks, a lot of credit unions are usually hesitant about making loans out to people with a less than good credit history.
Exploring the World of Peer to Peer Lending
If your attempts to get a loan from a credit union fail, your next best bet is to learn more about something called "peer to peer lending." Peer to peer lending organizations are organizations that make it easy for people to loan each other money.
In peer to peer lending, you borrow money from individuals instead of institutions. While many of these individuals are not as strict about making out loans as most banks or credit unions, they will want higher interest rates on the loans they make out to people.
In other words, you will end up having to pay more in the long run if you go the peer to peer lending route.
Peer to peer lending also has the disadvantage of being less well regulated than banks and credit unions. Banks and credit unions are under close government scrutiny; peer to peer lending much less so.
If you are not the adventurous type, peer to peer lending may not be appropriate for you. You may want to try to spend some time raising your credit score or looking at some of your other options.
Payday loans are notorious for being remarkably easy to get. They are made out by a large number of companies.
In fact, there is an entire industry that focuses on providing payday loans.
The good news about payday loans is that it is very easy to get one. All you typically have to do is provide a payday loan company with proof of employment and you are good to go. (Of course, loan requirements vary with some companies.)
The downside of using payday loans is that they typically have much higher interest rates than loans made out by banks and credit unions. But if your credit score is really abysmal, you may not have a choice.
Fortunately, there is a way to safely borrow money from payday loan organizations. First, you really need to spend some time doing your research. You need to do your best to find out all you can about the most popular payday loan companies.
Spend some time reading about their history and (most importantly) looking at customer reviews. If you see that a lot of people are very happy with a particular payday loan company, it's a very good sign that that company can be trusted.
You should also check and see which payday loan companies offer the best interest rates on payday loans. While it may seem like there is not a lot of variation in that area in the industry, some companies really do offer better deals than others. It's up to you to find out which ones offer the most attractive interest rates on their loans.
When you find a payday loan company you feel comfortable working with, you should spend some time carefully considering how much money you want to borrow. If you borrow too much money, it may be difficult for you to pay it all back in a timely fashion because of the high interest rate.
Ideally, you should borrow as little money as you possibly can. That way, the odds are that you will be able to pay back the loan and boost your credit score. Remember, your ultimate goal should be not just borrowing money but improving your credit score so that it becomes easier for you to borrow money in the future.
Having a good credit score can save you a lot of money, and, contrary to what a lot of people think, it's almost never impossible to improve your credit score. It just takes time, effort, and a good strategy.
Asking Family and Friends
If you are really strapped for cash and none of the foregoing options will work for you, you can always try to borrow money from your family or a good friend.
Unfortunately, there can be a lot of negative consequences to borrowing money from family and friends. If you fail to pay back a loan a family member or friend makes out to you, you may lose his or her friendship.
Before taking out a loan from anyone you know personally, you should spend a lot of time asking yourself how much your relationship with that person means to you, and what you plan on doing if you can't pay back the loan.
It's not always easy getting a loan without a credit check. But it definitely isn't impossible. Try some of the foregoing options, and you will probably be able to find a way to get the loan you need.