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Where Can I Borrow Money with Bad Credit?

Everyone needs to borrow money at some point or another. So if you have had bad credit in the past and are trying to rebuild or have no credit history at all, there are ways to access temporary capitol even with a less-than-desirable credit rating. While the best way to have access to credit will always be to improve your credit rating, you may want to consider other options—a secured credit card, a payday loan or a cosigned loan—until credit can be rebuilt.

Secured Credit Card: While credit cards with rewards like travel, cash back and lowered interest are nice, these features are generally reserved for people with great credit or people that can afford a higher interest rate. For people trying to rebuild their credit, a secured credit card may be a better way to go. Like a credit card with training wheels, a secured credit card has a financial backer—someone more stable who is on the hook for the balance—so if you fall, there is someone to make sure you don’t fall far. If you have no one to back you, many credit card companies will require you to deposit the entire amount of money that the credit line will be for. If you are trying to save money, this is not the greatest way to go. But for a shattered credit rating, a secured credit card gives you a worry-free way to prove you can pay on time. But the additional fees and interest quickly add up so, as soon as you have the means, find credit cards with rewards and favorable balance transfer terms. Just make sure you always pay on time.

Payday Loan: A payday loan is available to people who need to borrow money for a short period of time. Proof of employment is required and the interest rate is usually steep. This type of loan is good for emergency situations if you know you will be able to repay the loan in a relatively short period of time. Again, because of the higher interest rate, it is not advisable to keep this type of loan open longer than necessary simply because if the loan is allowed to accrue interest, it will become much more difficult to repay.

Cosigned Loan: If a larger loan is needed, or if none of the other options are available, the borrower can request a friend or family member cosign a loan. A cosigner may be used on a variety of loans from store credit cards, major credit cards with rewards, automobile loans, and even personal loans. The personal loan line of credit allows the borrower to use the money to finance whatever he or she chooses. This is ideal if the money is needed for an expense rather than a purchase. Some examples include paying for auto or home repairs, medical treatment, or even a utility bill. If the borrower can find someone to cosign for one of these loans, it is more likely they will be approved and get a far better interest rate than if they choose one of the other methods. However, by putting a cosigner on the loan with them, the borrower is jeopardizing not only his credit but the credit of the cosigner should payments be made late. Therefore, it is imperative that the borrower makes every effort to repay the loan in a timely fashion and that the cosigner be kept apprised of the repayment efforts.

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