Need to know how to borrow money with bad credit? When you make large purchases, such as a home or car, you’ll probably need to borrow money. If you happen to have bad credit, however, borrowing money can be a challenge, since lenders are often hesitant to lend to those without a good history of repaying their debts. Fortunately, you can increase your chances of being approved for a loan even if you have a bad credit history.
- Offer collateral to your lender to make up for your bad credit. Collateral is any item the lender may seize in the event that you do not make payments after borrowing money. Some loans, such as mortgage loans, are always secured and collateral is a natural part of the process. If you need to borrow money for a personal loan, however, offering collateral can make the difference between a loan approval and denial.
- Make a large down payment to borrow money for financing purposes. If you happen to be financing a car, house, boat or any other large purchase, making a large down payment shows the lender that you have money available and are committed to both the purchase and the payments. Due to your bad credit, some lenders may even require a large down payment before loaning you the full amount.
- Get a co-signer to help you borrow money with bad credit. A co-signer agrees to sign with you when you borrow money. The lender may then take the co-signer’s income and credit into consideration when deciding whether or not to approve the loan. Lenders are more comfortable loaning to individuals with bad credit if a co-signer with good credit also signs for the loan. Repay any money you borrow responsibly. If you fail to do so, the lender can and will hold your co-signer responsible for repayment.
- Borrow money from lenders that don’t require a credit check and thus won’t refuse your application because of bad credit. Payday lenders often don’t conduct credit checks but charge high interest rates to consumers who borrow money. If your credit score is too poor for you to borrow money any other way, however, these loans can come in handy in an emergency.