Senior man writing notes in notepad while talking by speakerphone about emergency loan

Can I Get an Emergency Loan with Bad Credit?

The process of borrowing an Emergency loan gets difficult when you have the added complication of bad credit.

The American credit score is on the rise as more people are improving their credit. The average U.S. consumer has a FICO score of 703, which is up two points from 2018 and considered good. Almost 6 in 10 Americans now have a credit score over 700. People who have good credit are able to obtain loans at lower rates when they need them. Some lenders will simply deny your application if your credit score is too low. 

Unfortunately, bad credit can follow you for years and limit the choices that you have. Therefore, it is important to understand credit basics in case you accidentally ruin your credit with overspending. Bad credit will impact the bigger purchases that you make. You may not get approved for your dream apartment and purchases can cost more if your credit is bad. When buying a home with bad credit, lenders may charge higher interest rates. 

You should be continuously monitoring your credit to make sure your buying habits aren’t going to cost you in the long run. If your credit score dips below 500, it is considered poor and you may need to look into repairing your credit score. Good credit signifies that you are responsible and pay your bills on time which is one reason lenders take your credit score into consideration when making a loan. 

Can you get a loan with bad credit?

Even the best of us end up making poor financial decisions occasionally that can lead to bad credit. While having bad credit isn’t a lifetime situation, it is a consideration for most lenders. If you have bad credit and suddenly find yourself in an emergency needing fast funds there are a few loan options for you.  While many lenders won’t lend to people who have bad credit, payday loans and bad credit loans are available to people who haven’t maintained good financial standing. 

Should you get a payday loan?

Before you sign up for a bad credit loan or a payday loan, make sure that you understand the financial cost that you have for the loan. After analyzing how much the loan will cost you, you may determine that the purchase won’t be worth the cost in the long run. 

There are times when a payday loan is appropriate and even a smart idea. For example, you may have business expenses due at the end of the week, but your client’s payment hasn’t come through yet. To stay in business, you could secure a payday loan. Knowing that you will be able to pay off the expenses next week when the client makes his payment.  This is a very tricky situation because the client must be reliable and you must expect money to cover the extra costs associated with the loan. 

How to get an emergency loan with bad credit

It can be more challenging to get an emergency loan with bad credit, but there are some options available for you. You may be dealing with higher risks and more fees. But often alternatives to traditional banks are faster and more willing to lend to someone who has bad credit. 

  • Online lenders. Lenders who operate entirely online are able to provide access to people with bad credit because they avoid the overhead costs that are associated with traditional banks. Repayment rates can be exorbitant, but many don’t require prepayment penalties. 
  • Credit union loan.  Some federal credit unions offer their members small loans that are similar to payday loans. The loan amount is often capped and the terms tend to range from one to twelve months. These loans are usually only eligible to members of the credit union. 
  • Secured personal loan. Banks may offer loans with collateral attached to them known as secured personal loans. This collateral could be something like a cash account or car title. The asset reduces the risk to the lender and if you fail to repay the loan, they can seize the asset.
  • Apply with a co-signer or co-borrower. If you have a trusted friend or family member willing to take a risk on you repaying the debt, you can apply for a loan with a co-signer. The co-signer or co-borrower will agree to repay your debt in the event that you default or miss a payment. Using a co-signer with good credit can help you qualify if they have excellent credit. When you apply with a co-borrower, both of you are agreeing to repay the loan together.

As you can see, it will be a bit more challenging to get a loan when you do have bad credit. Therefore, it is important that you maintain good financial practices. If you are still in need of a loan, apply today with Jora Credit.

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