Put money in your pocket using these lending alternatives, even if you have bad credit.
Option #4: Take a Loan from Family or Friends
If an online peer won’t lend to you, perhaps you have family or friends who will. Treat a loan from someone you know just like a serious business transaction that’s clearly documented and legally recorded.
To avoid complications later on, create a written agreement that includes the interest rate, payment terms, any collateral you put up for the loan, and what happens if you fail to repay the debt. You can get promissory notes from sites like Rocket Lawyer or LegalZoom.
If you’re borrowing money to buy a home, the loan must be properly secured in order to take advantage of the mortgage interest deduction. To properly register and manage a home loan with a relative, use a service like nationalfamilymortgage.com.
The bottom line is that a family loan must benefit everyone involved and should really be a last resort. You don’t want to risk letting a close relationship go sour over a bad debt or a misunderstanding about money.
Option #5: Appeal to a Co-Signer
If you don’t have a friend or family member who’s willing to give you loan, perhaps one with good credit would be willing to co-sign a loan with you. Someone who knows your situation and trusts your ability to repay the debt would probably be willing to take a chance on you.
Just remember that if you don’t repay the debt, the creditor will look to your co-signer for full payment. Additionally, all the payment history will be recorded on both of your credit reports, which could be devastating for your co-signer if you don’t hold up your end of the bargain and make late payments or default.
If none of these 5 lending options works for you, do your best to raise your credit score so you can qualify for a traditional loan. A good place to start is to check your credit report for free at annualcreditreport.com and correct any errors that might be hurting your credit scores. You can improve poor credit by paying bills on time and not overextending yourself on loans and credit cards.
You can learn much more about how to check your credit report and correct errors in the free Credit Score Survival Kit. Download this multimedia resource for 3 smart strategies to build excellent credit and how to get your free credit score.
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