There are all kinds of purchases you will need to make in your life that are some pretty big ticket items and, therefore, require financing. Let’s face it, not everyone has a secret hidden stash of money just waiting to be used for that big ticket purchase. While the financing process is usually relatively simple and quick, for some people it can be quite a stressful time where they are unsure if they will even be approved or not. Those are the people who wear the label of “bad credit”.
Bad credit simply means that you have had a hard time in the past keeping up to date with your credit agreements. New finance companies and creditors see it as a red flag and will often end up turning away these people. So, if you have bad credit, does that mean you can’t get financing at all? Here’s the good news, there are options that exist for those with bad credit, and many of them can help you to actually repair your credit over time.
Here are some financing options you may want to look into if you currently have bad credit.
Use a Lender Who Specializes in Bad Credit Loans
One of the best solutions for those with poor credit is to look into lenders who specialize in bad credit loans such as Everyday Loans, who offer loans for £1,000 to £15,000, which covers those unexpected expenses or ones you’ve been trying to save up for.
Some of the common reasons people may use a service such as Everyday Loans include home renovations, a new vehicle, unexpected repairs to your vehicle, or another big ticket purchase. Because it is a specialist direct lender, it’s able to look at your credit file more fully and really make a decision based on your situation.
Now keep in mind, there will still be an approval process, but because these types of lenders deal with bad credit loans, you don’t have to worry about them looking at your credit history and rating. It’s best to be up-front with them and let them help. You will need to meet with a representative in person at your nearest branch, where they will go over your file, and you are encouraged to ask questions.
Look Into a Home Equity Line of Credit
If you happen to own a home, then you may be eligible for what’s called a Home Equity Line of Credit. This type of credit uses the equity you have managed to build up in your home. It tends to be low interest, but keep in mind that you are putting your property up as collateral.
Ask a Friend or Family Member
This tip isn’t one that is particularly attractive, but in some cases, there is just no other solution. Asking a friend or family member can be a tricky situation. We’ve all heard that friendships and money don’t mix, which is why you want to go about it in a legitimate way. If you are going to ask to borrow money, make sure you give it some thought and draw up a loan agreement. The agreement should detail how much you are borrowing when it will be paid back, and how often the repayments will be. By keeping things very straight and to the point, it will make it feel more like a business transaction.
You may also want to agree on a set interest rate for the loan, as you’d be paying interest if you got the money from a traditional lending institution. Again, it helps the loan feel legitimate easing the minds of both parties.
Start Cutting Back on Expenses
In the meantime, it’s also a good idea to start cutting back on your expenses. This not only puts more money back in your wallet at the end of the month, it also helps you to look better when speaking to potential lenders. They will see you are doing a good job managing your money and that your debts are reducing.
This is also the time to actively work on improving your credit rating. While this may not help you right now in the short-term, it will help to improve your future credit score. Tips that will help you improve your credit score include making sure your credit record is accurate and then clear off any collections, lower the amount of debt you have, catch up on late payments, and create a budget that you can stick to.
Financing is Possible
While it may seem like you have no financing options available to you when you’ve got bad credit, there are solutions out there. There’s also the fact that you can actively be working on repairing your bad credit so that in the future you won’t have to worry about financing.