How to borrow money with bad credit history?
Although credit history is the most significant thing your loan officer will look at, poor credit score doesn't mean that borrowing is out of the question. If you have already been turned down for a loan or donāt want to overpay high interest, there are some alternative lending options to consider.
1. Use you assets as a collateral
If you have property of sufficient cost you may apply for tax-deductible home equity credit line and obtain comparably low interest rate regardless of your credit score. This option is applicable for those who have reliable and stable sources of income, because such loans put your hosing ownership under risk if you fail to repay the debt.
2. P2P lending
Within the last 10 years, online technologies gave birth to the new and more empathetic type of borrowing ā peer to peer lending, which allows individuals and businesses raise credits directly from individual investors through special online services bypassing traditional banksā crediting. Interest rates may vary from 6% to double digits and the terms would depend on your agreement with a particular lender. So, if you need a loan you can place an order with such service, explain your situation, provide credit history details and wait for a lender who finds your case as risk-worthy.
Micro-loan is a money lending non-banking product applicable for impoverished people who lack collateral, stable salary and reliable credit history. Micro-credit organisations provide loans to both individuals and businesses. They are less strict in terms of your credit history but keep in mind that such lenders usually charge higher interests and borrow for shorter terms.
4. Borrow from your close friends or relatives
Another option to gain funding is borrowing money from your relatives and friends. Of course, putting your personal relationships under risk should be considered as a last resort, given the variety of lending options available in the market today, even for those whose credit history is not brilliant. Make sure the deal is documented and legally recorded to avoid unpleasant complications in the future. Sign a written agreement, which reflects the amount of debt, interest rate and terms of repayment and determine the collateral that would cover the debt if you fail to repay it. These terms should benefit everyone. If your friends and family don't have money, keep in mind that one of them with good credit score can co-sign a loan with you.