As you probably know by now, your credit score has a lot of power over your life. If your credit score is very high (say, over 700 or 750), you will be offered the lowest interest rates by banks and other lenders when you apply for a new auto loan, mortgage, or personal loan.
However, if you have a bad credit score (below 620), the opposite is true. You will be offered high-interest loans, regardless of to which lender you apply for a loan.
And, things can be even worse if you have extremely bad credit (a score under 550). If you are in this situation, it will likely be almost impossible to get a loan from most lenders. The only silver lining to this cloud is that you will be spared the high interest rates of a loan for someone with poor credit – since you will not have a loan! The bad news, however, is that you won’t get to borrow any money from most lenders.
If you do have extremely bad credit, loans can still be made available to you. There are, in fact, loans within your reach even if your FICO score is currently below 550. Here are the options available to you:
1. Ask a family member or friend for a short-term loan: If you have extremely poor credit, you may want to consider asking a trusted family member or friend for a short-term loan.
Of course, borrowing from friends and family is not always possible. And, even when it is possible, it is not always advisable since it can result in hurt feelings or worse if the loan is not paid back in a timely manner. So, this option is not for everyone.
2. Find a way to raise your credit score in a short period of time: You may think this one sounds like a silly suggestion. After all, if you could raise your credit score quickly, you would not be in the current mess you are in now, right? But, think again. There are proven ways to raise one’s credit score by 50, 100 or more points in just a few months’ time. Once you come to really understand how your credit score is calculated and what factors are considered in determining your score, you will suddenly have the power to take quick and effective action to raise your score.
The only drawback to this option is that it can take 1-2 or more months to raise your score. This does not help if you absolutely need to get your loan today.
3. Contact a lender who specializes in extremely bad credit loans: If you have an immediate need for your loan but can’t borrow from someone you know, your best option is to find a lender who specializes in lending to people with extremely bad credit.
Similar to poor credit loans (described above), extremely bad credit loans will involve a high interest rate. But, if you are looking for a short-term loan that you will pay back quickly, that should not be a significant factor in your decision.
If you do decide to contact a lender who specializes in extremely bad credit loans, take the time to select the right lender. Make sure to compare at least 4-5 lenders before settling upon the best one.