Five ways to get money if you have bad credit
It is that time of month again – the time when bills need to get paid and stress levels rise. If you are experiencing a cash-flow problem, it’s time to look into your loan options. Unfortunately, if you have bad credit, you may find that your options quite limited. In fact, you will definitely find that they are limited. Getting cash will prove a rather difficult task. Don’t worry though, you are not alone! In the UK, many individuals find themselves struggling to get quick cash loans. And in most instances, it is due to a poor credit rating. Before we take a look at your options, let’s get a better understanding of bad credit…
What is bad credit and how does it happen?
What exactly does it mean to have a bad credit rating? How did you earn such a rating and is it reversible? The term “bad credit” means that your loan application has been rejected because of one of the following reasons:
- You have missed monthly payments on an account;
- You were previously bankrupt;
- You have defaulted on an account;
- You have CCJs or an IVA.
Bad debt takes approximately six years to come off your credit history once the accounts have been settled.
If you have a bad credit rating you will be viewed as a high-risk client and until you raise your credit score, you will be considered a no-no by major banks and lending institutions. Don’t fret too much though. There are alternative options.
The statistics on bad credit in the UK
Towards the end of 2018, the BBC reported that the National Audit Office had completed a survey that uncovered shocking statistics! Up to 8.3 million people in the UK are unable to pay their debts and household bills. The average UK household is in £58,540 debt (this includes mortgages).
The problem with debt is that even once you do get on top of it, the credit rating you have earned will continue to affect your life. And as a result, it can affect your loan and credit applications in the future.
Alternative options for bad credit loans
If you have applied for a cash loan and been rejected, here are five alternatives that you can consider to get the money you need:
1. Use your home equity as a line of credit.
Did you know that you can use your existing mortgage as a way to get money? If you have a reliable income and are certain you can afford the monthly loan repayments, you can use the equity in your property to get a tax-deductible, low interest line of credit. Make sure that you service this loan well, so that your property is never at risk.
2. Apply for cash loans with short term lenders.
Short term lenders often offer simple qualifying requirements for quick cash loans. Sometimes the interest rate will be a little higher, but they will take a broader view of your overall financial situation. If you can prove that you earn a steady income and pay your bills promptly, you have a greater chance of getting a loan from a short-term lender than from a bank. Short term lenders often offer an online loan application process which is convenient too.
3. Get a peer to peer loan.
Peer to Peer lending is rife in the UK. Don’t know what it is? It’s a loan that is provided by an individual instead of a bank or lending institution. This type of lending has been popular since 2005. It’s a loan that typically involves an online process of listing how much you need, what you plan to do with it and why you are a suitable candidate for a loan. Lower interest rates are often offered and while your credit rating still plays a role, the lender is able to decide for themselves if they wish to offer you the loan or not, despite it. Empathy from the investor plays a large part in this process.
4. Get a co-signatory.
Struggling to get a loan simply because of a poor credit rating can be frustrating. If you know that you can afford the monthly instalments and are in a stable relationship with someone with a good credit rating, consider asking your partner (or even a family member) to co-sign the loan application with you. This will immediately make the application more favourable as your co-signatory will be confirming that they will settle the debt if you default on your monthly payments.
5. Get creative.
If you still can’t get quick cash loans in the above mentioned ways, you can get creative with your money-making efforts. First and foremost, you can consider asking family and friends to make you a loan. If you can’t bring yourself to do that, you can gather some extra cash in the following ways (these are ideal for small cash amounts):
- Downgrade your mobile phone. If you have a decent mobile phone and need extra cash, you can clear the phone, sell it and invest in a cheaper smart phone. Use the balance as the extra cash that you need.
- Declutter the home. Old clothes, shoes, and household appliances can be sold online or in second hand stores for a bit of extra cash.
- Provide a service such as dog walking, house sitting, pet sitting, baby-sitting, and even lift sharing.
- Downgrade your vehicle. If you can part with your car, you can sell it and invest in a cheaper mode of transport.
Last word
When it comes to applying for quick cash loans, remember that there are various lenders that make the process easy. If you are struggling to get a loan because of bad credit, try the five tips above to improve your chances.