Depending on different life circumstances, everyone can become a victim of a bad credit. Likewise, it’s not good to have no credit history. Bad credits also put you at a higher risk to be turned down for your loan request. At this point, you’re considered a customer that might not simply finish repaying the taken credit due to your possible default/bankruptcy. To your benefit, being a person with a low credit score doesn’t necessarily mean you can’t get a loan at all. Below are 6 best alternative credit options you can take advantage of.

1. Peer to Peer Loan

P2P loans have been widely accepted as one of the best alternatives to traditional institutions since 2005. This is how it works: you register one of the websites that offers a loan from a private owner, submit the application with all the necessary information (how much money you want to borrow and why), and then wait until some investor agrees to give you this credit based on your requirements and your score.

This option is beneficial for both lenders and borrowers. In the first case, a private loan provider is more flexible in terms of people who have poor credit records. In the second case, lenders benefit from the loan’s high interest rates.


2. Small Personal Loan

Similarly to peer-to-peer loans, you can choose small personal loan. It is possible even if you have bad credit. Keep in mind that the rates are often higher in order to compensate the risk of default. But here’s a deal: small loans are at least something. If you are serious about your finance, a small loan can help both your financial hardship and credit history.

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Sometimes it turns out that the candidates with bad credit can be applicable even for a secured or unsecured personal loan at a fixed interest rate. This is called the high interest rate personal loan. They often can be more beneficial than credit cards.

3. Home Equity Line of Credit

You may say: “Pledging your property is a risky business and I will never agree to this”. But think about this: using a home equity line of credit offers low-interest and tax-deductible loans that you can use for various purposes. Knowing you have a stable income and to do payments in time, why not use the opportunity? This type of loans is quite tolerable to people with bad credit scores.

4. Credit Union

Credit Unions work better in small towns and communities and they resemble banks. The difference is that credit unions pass along the members’ earning by setting lower fees and a better customer service. Take a look to find the best credit union nearby and discuss your options regarding the loan. Don’t hesitate to call to the bank’s representative to know the details.

5. Secured Credit Card

Banks always try to secure themselves and often require making a secured credit card as a security deposit – a monetary deposit given to a bank as proof of intent. Oftentimes, before you can persuade the lender in your ability to pay back the loan in time, you may be ordered to make the initial deposit.

6. Payday/Title Loans

Payday loans are so common that it’s hard to say for sure if lenders necessarily put high interest rates. However, you can win from having a well-paid job. Try to establish why you need this payday loan in the first place (definitely not for repaying another loan). If you own a car or another mean of transportation, then your possible option can be a short-term type of a credit according to which you give in the title of your vehicle as a collateral.

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These are 6 most effective and quick credit options for people with bad credit. Keep in mind that none of them can solve long-term monetary issues. However, sometimes urgent help is all we need to stay afloat. Additionally, if you are interested in savings and investments, consider applying to a state-owned investments organization.