Obtaining a loan when you have a bad credit score is difficult because lending institutions base your ability to repay on your previous credit history.
That’s acceptable if you only need a loan to buy a tangible object that you could live without. What if it’s for essential medical treatment for you or a loved one, that you cannot live without, and nor do you have to.
There are borrowing options available to help you secure the money you need, even if your credit score is not above the required 650 ratings.
Here are some of those options:
Ask Family Members or Trusted Friends for a Loan
If lending institutions have turned you down and you have family or friends willing to lend you the money, then now might be the time to ask.
It can be embarrassing, and no one wants the stigma attached to asking for financial help, but ask yourself this. If you knew a family member or a close friend needed medical care but couldn’t afford it, would you step in and help them?
If your answers yes, then odds are they’ll do the same for you.
The positives of securing a family or friend loan are you borrow while avoiding the-sky high-interest rates charged by a nervous lending institution. It can also help you avoid slipping further into debt.
You could agree upon a flexible repayment plan with little or no interest. Or a deferred repayment plan until such a time that you’re back on your feet, both physically and financially.
But what if that’s not an option?
Your next option could be a co-signed loan:
Co-signed Loans
Staying with the family or friend approach but removing the direct financial burden placed upon them. A co-signed loan works by asking someone who has a good credit score to agree in sharing the loan’s liability. Meaning you could secure loan approval and at a lower rate of interest.
However, the co-signer would be taking on the responsibility of repaying the loan if you become unable to do so.
Co-signers are used regularly for this purpose, as many first-time borrowers do not have a credit history. Most lending institutions are happy to proceed where a co-signer has a proven credit track record.
The downside is if you fail to repay and your co-signer isn’t in a position to pick up the check, your loan will negatively impact both their credit score and possibly your friendship.
Peer to Peer Loans
P2P lending, also known as (crowdlending and social credit) is where you obtain a loan directly from another individual and cut out the middle man, IE, a lending institution. It works by a peer to peer website connecting those seeking a loan directly with willing investors. You can use it to obtain loans to finance a multitude of personal reasons, including medical.
Several websites facilitate P2P lending, and this form of credit has increased in popularity since the global financial crash of 2007 as an alternative solution for financing.
Secured Loan
If you own an asset, such as an apartment or a house, you can use it as collateral for obtaining a secured loan. The advantages are you can get a loan and a lower interest rate, but there are risks involved!
Secured loans are for borrowing sums of money from $3000 or more. While it’s less risky for the lender to give you credit, you run the risk of losing the asset you used, because the lender can repossess it if you fail to repay per the agreement.
Apply For A Bad Credit Loan
If none of the above means of borrowing the money you need are possible, then your last option is to apply for a bad credit loan.
A bad credit loan is just another name for a personal loan. In this case, the lender will take into account your credit history when determining the amount they will lend and the interest rate they’ll charge you.
There are several lending institutions, such as prosper medical loans, who are willing to provide loans to those with a credit score under the desired 650 rating, where most traditional banks would either refuse you or charge incredibly high-interest rates.
There’s no guarantee that you’ll secure a loan even from an institution that provides this service. Still, these companies offer it due to the high demand. The truth is, you’re not alone when it comes to having a bad credit score.
CONCLUSION:
You aim to get a loan to address a medical need, not slip further into debt. Consider the first three options before applying to a lending institution, but don’t give up if those don’t work, your physical and financial health depends upon it. I wish you well.
