How to Borrow Money With a Bad Credit Rating
A bad credit rating can make it difficult to borrow money. If you need to purchase a car or have an emergency, you may need to borrow money to get by, but many lenders will reject you if your credit rating is too low. If you do find a lender, the terms on the loan may be less favorable for you with higher penalties for late payments, and the interest rate will be higher. It is important to try to improve your credit rating so you can borrow money.
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Instructions
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Make a list of all loans or accounts that you are behind on. This may include your utilities payments, credit cards and other bills you have not had money to pay. Pull a copy of your credit report to make sure you have not forgotten any of your accounts. Total up what you need to pay each person to bring the account current.
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Create a budget by listing your current income and your expenses. Make sure that your expenses are less than your income, and try to cut your expenses so you have extra money to get your payments current. You may also make a plan to work on getting all of your debt paid off to further improve your credit score.
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Sell items or take a temporary second job to raise money to get current on your debts and payments. Generally you can catch up with a few hundred or a thousand dollars. This money can be earned quickly with a second job.
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Apply for a loan at a credit union or a small local bank. They are more likely to work with you, but most people will not lend to you until you are current on all of your accounts. Set up an appointment to talk with a loan officer and explain your situation in person.
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Find collateral you can put up for the loan. If you have bad credit, lenders may give you more favorable terms if you attach the loan to something they can collect if you default on it. You may put up your home or car in order to borrow the money. However, if you default on the loan you will lose whatever you used as collateral.
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Tips & Warnings
Be careful of using financing offered specifically to people with bad credit. Often these rates are higher than 15 percent. It is difficult to fix a bad financial situation when you are paying high interest rates each month.
