You don’t have to worry that no bank will borrow you money when you have poor credit score because you can still turn to non bank lenders. People with bad credit score will usually turn to non bank lenders such as payday loans or secured loans because they don’t do background check or make any inquiry on your credit report. Secured loan is a type of loan that requires you to put your asset as security such as house, stocks or vehicle. The borrow amount will depend on the value of the asset that you put as security. The value of an asset is calculated by deducting the amount you still owe from its current value in the market. The only downside of secured loans is that they have high interest rates.
Another option is peer to peer lending platform where individual investors lend money to the individual borrowers. P2P loan is quite new and it has only been around starting in 2005. You can post a listing that describe the amount that you need to borrow and the purpose of the loan on the P2P platform. Lenders will review the listing and decide if they want to fund your loan. They will still look at your credit score but they may be looser and be willing to lend you the money since they are individual investors.
You can also obtain a loan from the credit union. Credit union is a non for profit organization that usually offer lower interest rates and lower monthly payment. They are often willing to lend you money without looking at your credit report. They will decide whether to approve the loan based on your spending habit. You should sign up with a credit union that is related to the type of occupation that you do. For example, if you are a nurse, you can sign up with a credit union that specifically offers loans for health care professionals.
If you prefer a loan from the bank but you have poor credit, you can ask someone with good credit score to be your cosigner for the loan. The cosigner will be responsible to pay for your loan when you are facing financial problem in paying for the loan. Your credit score will increase if you repay on time. You can obtain the loan yourself in the future when the credit score has increased up to a satisfactory level.
You can borrow against your home by signing up for the home equity line of credit (HELOC). In HELOC, you are borrowing an amount that is the difference in between the house value and the mortgage. HELOC has low interest rate but it is tax deductible. With HELOC, you have access to the money you borrow up to the limit of the credit line. The downside for HELOC is that your home can fall into the hands of the bank when you miss the repayment schedule.