These days, having a low credit score is nothing unusual, and there are lots of people who have found themselves in this situation. Since the global financial crisis in 2008
, many people found themselves in serious debt, and this is something that has continued to affect them for years moving forward. As a result of the number of people with damaged credit, lenders have had to provide solutions for those in this situation.
From subprime credit cards to a collateral loan
, there are various options these days that are designed for those who have damaged credit. While it is difficult to get as much choice as those who have good credit, and you may be charged a lot more for your borrowing, it is good to know that there are solutions available that can provide a financial lifeline to people who do not have the best credit history or score. In this article, we will look at some of the borrowing options for people who have low credit scores.
What Are the Options?
There are various options you can consider if you need a financial lifeline and wish to borrow money. Some of the options are:
Subprime Credit Card
One of the options you may be able to consider is a subprime credit card
, and these cards are specifically designed for those who have damaged credit. With this in mind, the credit limits are generally much lower than for standard cards. In addition, interest rates tend to be much higher, which means that unless you clear the balance in full each month within the interest-free period, you could be paying eye-watering rates of interest on your borrowing.
Another of the options you may be able to consider depending on your circumstances and situation is a collateral loan. These loans are secured loans, which means you need relevant assets to put up as security. This could be things such as property, your car title, or business assets depending on the type of collateral loan you take out. You will find it easier to get one of these loans when your credit score is low compared to unsecured loans, and this is because you represent a lower risk to the lender because of the collateral that is put up.
If you need money very quickly, and you only need a modest amount for a short space of time, a payday loan could be a great choice for you. With these loans, you can often get the money paid into your account on the same day as your application. These loans do not go by your credit score, so it makes them ideal for those who have damaged credit but need to borrow money. You can borrow the cash for a short space of time, but some lenders allow you to roll over the loan.
These are some of the options you can consider if you need to borrow money but you have damaged credit.