In today’s inflationary periods, being in dire need of additional funds are inevitable. However, accessing them is no picnic since most financial companies will require borrowers to have good credit.
Thankfully, there are borrowing options available for those who don’t have a poor credit rating, spotty repayment history, or those who don’t have a credit score. If you’re one of these people, the following can be your lifesaver.
No-credit-check loans, such as payday, car title, and bad loans, are loans based on income and employment status rather than credit history. That also means they’re beneficial to those with bad credit or no credit history.
Apart from credit scores, borrowers don’t also have to worry about collateral since most no-credit-check loans are unsecured. They can also be used for various purposes, including big purchases, emergency funds, medical costs, debt consolidation, and many more.
Being unsecured and requiring no credit check gives lenders higher risks, so no-credit-check loans usually come with high-interest rates. Some of them can be difficult to qualify for, especially if you’re unemployed or have no income.
Some providers of no-credit-check loans may be more lenient than others. Hence, the key is researching and comparing offers to find the best deal. No credit check loans are available from many financial institutions, including banks, credit unions, and online lenders.
Asking someone to be your co-signer helps you get approved for a loan and a lower interest rate. Both of you will share the same financial responsibility for a loan, so both of your credit scores will be assessed. If your credit score isn’t so good but your co-signer’s credit score is stellar, the probability of getting a loan is high.
To increase the chances of getting approved, make sure that your co-signer has the following:
A good credit score of 670 or above; Low debt-to-income (DTI) ratio of 35% or less; and Solid income, preferably exceeding the income needed for approval. Although asking for help from a co-signer doesn’t impact your credit, a co-signed loan helps you build your credit score. It usually happens when you repay your co-signed loan in full and on time. Timely payments add positive credit history to your credit reports, resulting in an increased credit score both for you and your co-signer.
However, since they guarantee your debt, they must pay for it and get their credit damaged if you miss a payment or default. If this happens, your relationship will also be hurt. That’s why it’s always advised to inform them and let them understand the risks and their rights of co-signing a loan—the same goes when you’ll co-sign a loan.
Credit Card Cash Advances
A credit card cash advance is one type of cash advance that allows you to use your credit card to withdraw cash, which is then added to your credit card’s balance. It’s essentially a loan against your card’s line of credit but will only be considered a credit card transaction. In other words, it won’t inherently hurt your credit score.
Among all borrowing options, it’s one of the most convenient financing options. You don’t need a credit score or process a loan application to obtain it. You only need to bring your credit card, go to the nearest ATM, and process a cash advance. Alternatively, you may also go to the physical bank of your credit card issuer and process the cash advance over the counter there.
Buy Now, Pay Later (BNPL)
As its name implies, buy now, pay later (BNPL) financing allows you to make purchases and pay for them, usually in instalments. The difference between BNPL loans and credit cards is that the former doesn’t usually don’t charge interest or fees, while the latter does.
Additionally, BNPL loans have fixed repayment schedules, which means each payment is the same, and you’ll know them upfront. In contrast, most credit card fees change from time to time since their interest is variable.
A poor or no credit score doesn’t have to stand in your way of getting any financing to cover your urgent needs. You may have to put in some more work, but all these extra steps will help you qualify for a loan and a better rate, regardless of your credit.