Alternative Credit Tools for Those with Bad Credit

Sometimes your credit score is so bad that everywhere you turn to get a loan will always result in a declination. It’s a sad fact that we all have to accept, when you have a bad credit history. If you have time to put measures in place to improve your credit history a few months before you need the loan then you have a higher chance of getting and approval. However sometimes you don’t have the luxury of being able to pre-plan for a loan. In these circumstances you need a loan but still suffer from a bad credit history, there are a few alternative credit tools that you can use in place of a normal bad credit loan.

Sometimes you can approach the lenders slightly differently to get different results. Not many people know that with different products, there are actually different credit score allowances and cut off points. Depending the severity of your credit score and also how long your credit score has been bad, you might be eligible for certain products. If your credit score has only recently been bad, however has been consistently good for he last previous years, then the lending institutions may allow you a longer term personal loan even if you have a terrible credit score now. You may also get approved if you are willing to put up something highly liquid as collateral or accept higher than normal interest rates.

One should also never discount the usefulness of person-to-person loans or IOUs. Specifically it is more commonly referred to as peer-to-peer lending. It can be done professionally or individually between two people. We recommend that if you need a very small loan just to cover your cash flow needs then it’ll be easier just to ask a friend or a family member to extend a loan to you with some verbal agreements. You’d find that this is actually a very valid way to get financing with very little costs if any at all. If you want to approach this professionally then you can get in contact with loan communities which can bring the needs of the lender and borrower together to get the transaction done. Going the professional route most probably means that you will need to pay an interest rate of between 10% - 20% with negotiable repayment terms.

If you work for the government or any other company that is affiliated with the government you might be eligible for a government loan or a worker’s grant of some sort. If you are indeed under the employ of government linked companies or even the government you should contact the finance departments and see if you have any special privileges that you can draw upon. Most of these loans for civil servants have very low bad credit requirement thresholds as it isn’t meant to be a profit venture rather it is a service to the employees by the government.

Some professions also have credit unions which have very reasonable loan products attached to them. The classic one would be the nursing credit unions which are renowned to be very forgiving with their credit requirements. If you are in a classic profession like nursing, doctors, lawyers or engineers then it is more than likely that you will have access to a union which can offer you loans that have very low bad credit requirement thresholds. Again it would be wise to speak to your finance department to see if they can source out any of these deals for you.

The last but certainly not least are cash advance loans or payday loan. Cash advance loan providers generally do not pull credit reports so even if you have the worst credit history but a valid job for a few years already then you will more than likely be able to obtain a payday loan. The thing is, there are certain restrictions and problems with cash advance loans. Firstly the amount that can be borrowed is generally very small, nothing more than $3,000 and the interest rates that are levied are almost as high as credit cards. It is for this reason that the use of cash advance loans should be limited to situations where it is absolutely necessary only.

Overall there are many options open to people with bad credit that can’t get a loan through the normal channels. The best would naturally be to exhaust all your personal options before going through professional channels.