How to Borrow Money When You Have Bad Credit

bad-credit

People that have good credit scores are considered a minority in this day and age. A lot of consumers have amassed large amounts of debt that they are struggling to pay off. This has made it rather difficult for many people to borrow money because they now have bad credit. All hope is not loss though. There are still ways for people to borrow money even if they have a poor credit history that resulted in a bad credit score.

 

  1. Peer to Peer Lending

One of the best things to consider if you have bad credit is peer to peer lending. This is a concept that has become very popular because it allows people with money to lend and acquire higher rates of return. This has become the concept that has allowed people that have a poor credit history to bypass many requirements that traditional banks require. There are websites like

Lending Club and Peer Form that can help burrowers acquire loans.

 

  1. Credit Unions

The traditional banks may have strict requirements, but credit unions do not operate under the same rules that traditional banks operate under. This is why these banks have often become a resource for so many that have less than stellar credit scores. Credit unions rely on membership so people that sign up for some type of banking or savings account at these branches will increase their chances of acquiring a loan.

 

  1. Home Equity Loan

The home equity loan is also a nice alternative to the traditional loan. People with bad credit can rely on the home equity loan in most cases because this type of loan is not based on the entire credit history of borrowers. This history of the borrower in most cases is linked to the payment history for the loan. If people have been making payments on their mortgage and they have equity in the home there is a good chance that they can get approved for a loan.

 

  1. Co-Signer Loans

When a burrower has bad credit there is the option of acquiring a co-signer loan. Having a family member or spouse with good credit can instantly improve the chances of getting the loan approved. What this basically does is make the co-signer responsible for the payments in the event that the primary burrower is delinquent with the loan payments.

 

  1. Cash Advances

The borrower that wants to skip the lengthy application process, credit history check and wait period will benefit from cash advance or payday loans. This has become rather popular for a large number of people that may only require a small loan until they get paid. Credit history is not really questioned here. This type of advance is based much more the employment of the borrower. A person that is borrowing from a cash advance location will need a W-2 and a checking account. They have to verify employment, but once this is done there is a high chance that the loan will be approved.

 

Improving Your Credit Score

When people make the decision to borrow money they should obtain a copy of their credit report first. They should make efforts to start cleaning up their credit history as they start looking for lenders. Making a conscious effort to improve the credit score can benefit borrowers.

How to Budget Wisely

budget-wiselyThe key to financial success begins and ends with budgeting. If you do not plan how you are going to spend your hard earned money it will be gone before you know it. In order to budget you have to get an accurate figure of what your income is. On the other side of the balance sheet you have got to see what are your expenses are. Assigning percentages to your expenses is one great way to assess financial needs and to not put too much money into any particular expense. When you are considering your expenses think about all types of expenses. Your fixed expenses are the same expenses that you will pay within a given period of time. Your rent, car payments and student loans are all fixed expenses that you can expect the same amount every month. Your rent should not exceed 35 percent of your income if at all possible. Different financial stressors can occur and if you are paying anything more than a third of your income you can really end up getting tight on cash. Other expenses to consider are your phone, gasoline, entertainment and things that can change from month to month. These are called variable expenses and you need to allocate a percentage that best suits your lifestyle for these expenses.

One of the most important expenses to consider is paying yourself. You will not be able to work everyday for the rest of your life so you need start saving for your retirement. But even more immediately than that you must always have 6-months worth of saving that you can live off of in case of an emergency. This savings would be considered an emergency fund and is absolutely crucial. One of our readers sent us a story about how he was transitioning jobs with different companies and after he quit his first job the second job rescinded their offer. This man was devastated and out of work for 5 months. He couldn’t pay his rent and had to take out a loan that he is still paying to this day. It was an unfortunate situation but he learned a great deal from it. Building your nest egg should be your first priority along with staying current with all of your expenses.

Credit cards can either be a helpful tool or the beginning of your demise. It can be a helpful tool if you take advantage of the 0% interest offers that many financial institutes have been issuing. Be careful though, if you do not pay off your debt when the 0% interest promotional offer expires you may have to pay a hefty interest payment that would backdate to the original date the promotion began. Credit cards should be used for big purchases and not for daily expenses. You should not buy McDonald’s on your credit card but you should buy that flat screen tv or a bedroom set that you can’t pay for in cash at the moment. Being conscious of your expenses is the first step to being able to manage and budget them to improve your financial success.

Why bad credit will hurt you later on in life

credit-will-hurt-you

May aspects of your life can be influenced by your credit. Bad credit can bring a lot of problems into your life. Even having no credit history has its own set of problems and limitations. Bad credit has an effect on different areas of your life which include your home, your job, and many other factors. There are surprising effects that your credit score could have on your life. The main reason for a low credit score has to do with money. If you are unable to pay what you owe to a lender, then that will have a major effect on your credit score.

 

How Bad Credit Affects Your Life

Among the things that could be affected by your credit score are:

  • Relationships
  • Emergency Money
  • Higher Prices for Various Needs
  • Employment Prospects
  • Inability to Refinance a Mortgage

It is amazing the amount of damage that bad credit can cause. Relationships can be damaged because of the need for friends to bail you out. Even employers look at your credit score as a factor to whether or not you can work for them. Other things that your credit score could mess with is your ability to rent an apartment.

 

Dreaded Interest Rates

One of the issues that come with bills is interest rates. If you have bad credit, you will have to pay higher interest rates. This means you are going to have to make a greater effort to pay off any debt you have with a bad credit score. As you can see, it is costly to have bad credit. The worse your credit gets, the more trouble you are going to have in multiple areas of your life. For some people, it gets to be a vicious cycle that is hard to break. Fortunately, there is good news.

 

How to Improve Credit Score

It is possible to improve your credit score. However, it is easier said than done for a lot of people, especially for those who have accumulated a lot of debt. Fortunately, there are steps that you can take in order to break free of bad debt. The steps to take in order to clean up your credit are:

 

  1. Pay off your bills in a timely manner. The more you are on time with your payments, the better your credit score gets.
  2. Keep a low balance on your credit cards
  3. Keep credit on an as needed basis.
  4. Don’t move around your debt.

 

Getting Help with Debt

 

You can also get help when it comes to paying off your debt. There are financial advisers that can help you come up with a plan in order to tackle all of the outstanding debt that you have accumulated. No matter the type of debt you have, you can still gain the help of an agent in order to come up with a plan that will not only help you pay off what you owe, but also save money in the process.

Good Ways To Pay Off Your School Debt

school-debtSarah Lawrence College in Bronxville, New York is the most expensive school in the United States of America today. To enroll there, you will need about $44,220 for tuition for an entire year. This is not inclusive of fees and accommodation. If we were to include the two, one would have to dig deeper into their pockets and add an extra $14,000. Being a student here will require you to seek help to clear out your tuition costs. And it is not only students from Sarah Lawrence College who are affected by the high tuition fees. The cost of education, particularly college education has gone up by 130% in the past two decades. This has in turn affected many college students throughout the country. Many students now have to take up student loans in order for them to finish school. And whereas taking up the student loan is easy, paying it back can be quite challenging. This can be attributed to the increased unemployment levels the country is facing. However, in this article, I will be sharing with you some of the best ways to ensure that you pay off your school debt with much ease and the shortest time possible.

 

  1. You can do better than the minimum payment

This is one way of ensuring that you repay your college loan in the shortest time possible. It might be a bit stressful to pay a little bit extra than the required minimum payment especially if you don’t have a job. However, this doesn’t mean that you should add a lot of money. If you can add an extra $20 or $10, it’s still okay. To make this easier, you can set up an automatic payment with the extra cash added on top.

 

  1. Consolidate and Refinance

This is a very effective way of clearing your school debt. When you refinance your student loans, the interest rate decreases. When you refinance your loan, a majority of your income goes towards clearing the debt. You usually get one consolidated loan that comes with a one-month payment plan when you refinance your student loan. Many people only take up loans whose interest rates can be lowered through renegotiation.

 

  1. Pay every two weeks

You can decide to pay your loan every two weeks instead of paying it every month. This does not mean that you have to pay double the amount you usually pay in a month. Here, you will divide your monthly payment into two and pay each half every two weeks. If you do this for a whole year, you will realize that you actually made an extra payment.

 

  1. Use your raises

Most of us work in places where we receive raises at the end of every year. Instead of using your raises to buy expensive gifts like big TVs or a car or going on holiday, why not use it to pay your college debt? Although you may want to treat yourself at the end of a very stress full year, don’t you think that it would be better to live a debt free life?

 

  1. Cut back on your budget

One way of increasing your savings is by reducing your spending. When you cut down on your spending, you will have more money to use in clearing out your student debt. Although you may have to cut down on a number of things you love like cable TV, alcohol, going out to restaurants among others, clearing your college debt will be more fulfilling.