Bad Credit Loans

downloaduIf you have a weak or even bad credit rating, it may become nearly impossible for you to get any kind of financial or cash loan. Unfortunately, such times in life seem to be just the periods where it happens that you need to get hold of either some cash or, in more severe cases, larger amounts of money. The reasons for such needs do wildly vary, from sudden illnesses, to incredible business opportunities. The ultimate goal is still the same, you need money, but all conventional means of getting any have been exhausted. The question right then and there is simple: Are there any viable and legal options, and if there are, which are they?

What to do first?

Well, you have to ask yourself how you can actually convince someone that you will pay them back, if they lend you the money. Most lenders, even if they decide to give you a loan, will expect some kind of collateral. Therefore, the easiest loan to get, even with a bad credit, is one secured with a property you own. This is why you mainly see, particularly with advertising relating to bad credit loans, the side-line “only for home owners”. If you own your home, you can also take into account pursuing a mortgage, a second mortgage or perhaps, if you have already paid for a longer amount of time, you can consider re-financing your mortgage, being how nowadays mortgage business is faring, you may even get a better deal than you already have. Other options include putting up your car, jewellery, stocks, securities, life insurance and any other valuables you may possess.

Been there already?

In case that you either already have explored or used up any and all above mentioned avenues, you still have options that you can consider. One of such options goes towards your future salaries, if you are having a steady job, or even your future unemployment benefits, the so-called payday loans. Other ideas include asking family members or friends to act as your guarantors, which requires some degree of trust, since that in case you are unable or unwilling to pay off that loan; they will become the responsible party for covering it. In any case, neither the payday loans, nor the guarantor loans can provide you with a large amount of money such as mortgages or secured loans can do, but they can help you built up your credit rating and facilitate more options with regular loan sources in the future.

Credit cards for bad credit

Generally speaking, such unsecured and secured credit cards do not provide much if any cash sources for you, most of the time you need to put up a certain amount of money upfront, in order to get approved, which is then being held as collateral. Other scenarios include really meagre credit limits, horrendous fees, charges and interest rates; furthermore, some percentage rate cash advance fee may also be required – this means you do not get that money back. In any case, such credit cards, especially the ones that do not allow too much leeway, may be a good and solid way for you to build up your credit rating and become a more likely candidate for better deals.

What about credit unions?

These community oriented and based co-ops require membership, but are local, so you do get some kind of personal approach on this one. They are non-profit, which means they do not exist to make money off you, but are more service oriented and provide not only lending, but also savings products to their members. They work and feel more like the banks used to be way back when, where the bankers are also your neighbours and you know them and deal with them on a more intimate level. Such credit unions are more inclined to overlook bad credit ratings in favour of a long term membership, providing not only options, but also much desired flexibility and assistance. With such approach you are more likely to adhere to a good credit restoration program, where any and all arising problems can be handled and dealt with on a personal and direct level, without compromising your home, job or family safety.

Peer-to-peer lending

This relatively new kind of money lending is relatively new to the UK. It offers people who want a savings account with more return than the average 3% interest a way to earn better returns, but that money is then being funnelled into lending funds for people with bad credit. There are some risks, both with the person trying to earn a larger percentage, but also with the people getting the loans, because several such peer-to-peer middlemen companies have gone under and in the end nobody fared well. If you are considering such a source, then you must really verify the track record and financial stability of the lending house, because even if you pay your debt properly off each month, you still may default, if the lending house gets into trouble. The biggest trouble here is that several such companies do not have additional funding to safeguard any possible bad debts, furthermore, there is very much room for foul play, since that this form of lending and saving is not (at least as of yet) regulated by the FSCS, nor FCA. To be fair, the Financial Conduct Authority is due to start regulating peer-to-peer lending by spring of 2014.

What is the bottom line?

If you are having a bad credit rating, then your prime incentive should not be to borrow more money, but to consolidate your debt and repair your existing bad credit. You need to start thinking about your future and how the bad credit will affect your life and living conditions. Good planning is imperative and sticking to the plan vital. Try getting proper advice and guiding, make long term solutions and also make sure that you have enough wiggle room for eventual adaptations to the plan. In other words, do not just hunt after another loan, hunt for a long term solution.