To obtain a loan or borrow money with a low credit score is not impossible, but not just anyone will accept credit scores below a certain average. Some personal loan lenders cater to applicants with poor credit scores, but even there, there is a range one must fall into. 

Fortunately, these personal loans aren’t the only way to obtain money if you have bad credit. For someone who has a less-than-ideal credit score but needs money, there are several routes you can take. Here is how to borrow money with a low credit score.

Talk to Your Bank or Credit Union First

Many people go to their bank or credit union first. Ask about debt consolidation loans, personal loans, and how to borrow money with poor credit score. 

Chances are you won’t be able to get a loan using this method; however, it doesn’t hurt to start here and see what they are willing to offer you. You may be surprised by what they come back with, especially if they show significant income.

Seek Out a Lender Catering to Low Credit Scores

A low credit score is below 580. If your score is lower than that, looking at lenders specifically catering to bad credit is recommended. They exist. You may be surprised by what you can be approved for simply by applying to the right lender.

Bypass the Issue of Looking At a No Credit Check Loan

A ‘no credit check loan’ will not even make credit an issue for you and is a reasonable way to navigate around bad credit. Many of these no credit check loans are offered by alternative lenders. You must still provide proof of income and employment, share your debt-to-income ratio, and demonstrate your ability to repay.

Borrow From Yourself If You Can

A low credit score means you likely won’t qualify for a new credit card. However, if you have an existing credit card or access to long-term savings, this could be where you get money. Make it a loan to yourself and pay it back. 

Failure to pay yourself back means you’ll be left in a difficult financial spot and one that could cripple your monthly budget as interest adds up.

Avoid Multiple Hard Inquiries for Loan Applications

A key piece of advice to follow when borrowing money is, while you want to shop around for the best rate, avoid multiple initial inquiries. Every inquiry you make about your credit score will pull it down further, which is exactly what you don’t want. 

Talk about terms and interest rates with different lenders. However, don’t run a formal credit inquiry until you are all in and have decided on a specific partner for a loan.

Consider a Home Equity Line of Credit

A Home Equity Line Of Credit, or HELOC, allows you to use your mortgage or home as collateral. Having a mortgage puts your home at risk, but it may be an easy way to get money with a low credit score. 

A HELOC provides revolving credit where you can borrow, repay, and borrow again without issue. HELOCs are a very flexible way to take out loans and carry lower interest rates than many other borrowing methods.

Borrow Money from a Family Member or Friend

Ask a trusted friend or close family member for a line of credit or loan. This is a dynamic, however, to approach with care. A friend may not want to look at your credit score, and they may trust you, but you’re mixing finances with a personal relationship. 

If you can’t repay it and know you can’t realistically repay the loan, you put your relationship at risk in a major way.

Research Peer-to-Peer Lending Platforms

Peer-to-peer platforms allow everyday investors to lend to others and earn a return on interest. Peer-to-peer lenders allow you to borrow money in a way traditional lenders may not permit. Applying is easy. However, you may be given a rate or less than ideal terms.

Consider a Loan

If you want fast, easy access to money and need to borrow money quickly with a low credit score, try a payday loan. It’s limited in amount. However, if you can establish that you have a strong income and employment, you can qualify for a loan with a payday loan lender.

Ask Your Employer for a Paycheck Advance

Though it’s a bit old-school, some employers may be willing to offer an advance on your next paycheck. The downside is that you’re taking from your future to pay for your present. This creates a problem for you to deal with that will come around in your next paycheck. 

It’s not the healthiest way to budget or borrow money, especially as it makes your workplace awkward.

Published by: Martin De Juan