Low credit scores represent a problem for both lenders and attempting borrowers. Banks won’t lend to borrowers that represent a risk, and there are people trying to borrow while attempting to rebuild their credit history.  

Of course, people with low credit scores can get approved for a loan but they will surely have a harder time finding it than someone with a good credit score or get slapped with a high-interest rate.

People with low credit scores can come up with strategies to start building credit again without incurring more debt. Responsibility and patience are key so that you can borrow and pay on time while rebuilding your credit to clear your financial reputation and carry on with your targets.

What represents bad credit?

Your credit score is a report that lenders look at when they need to know how responsibly you handle your banking, it includes late payments information and how many times you’ve reached your credit limit. All lenders will review your credit score differently which is why it can be difficult to establish a bar to determine what constitutes as a bad credit score.

People usually are aware of the way they handle their credit so if people lack responsibility and good saving habits,  chances are that they have a poor credit score. Also, the way lenders see it, not having a credit record at all also means bad credit. Now, a common error is when people assume that they have a poor record but fail to investigate if that’s really the case.

If you get denied for a loan once, make sure that you check your credit score so you have a real insight of the situation, that way you can start thinking about solutions to overcome this.

What are my options to access a loan while having poor credit?

You need to explore all options, so visit lenders and see what options they may have for you, don’t rule out credit unions.  They will offer a smaller amount than an actual bank, but they are willing to work with people despite low credit scores, mainly because their focus is to help the community more than anything else.

Banks will rarely discuss a loan application with you, instead, they will look at your credit score and send a denial letter whereas with credit unions you actually get to talk to a person willing to understand your particular circumstances to find ways to help you.

Going with smaller banks can also help as they also work towards the community with more fair rates than big renowned lenders. Also, explore if maybe you can take advantage of modern technology as many lenders work as online lenders, they may have a plan for people with low credit scores.

Finally borrowing money from individuals rather than banks and their rather high-interest rates can be a good option. Family and friends can be helpful here in the event that your credit score is so low that not even individual borrowers lend you money.

Your friends and family know who you are and they may consider helping and trusting you. If you do receive help from a close friend or relative, do things the right way, make the proper arrangements and document everything for more clarity.

Finally, the last resort for people with significantly low scores can be exploring for unexpected earnings, for instance, many people are finding out if they were victims of the PPI scam. You can use this money as an alternative to achieve goals despite the low credit score. These offer a free method to potentially receive some money without a credit check being performed.

Having a low credit score is not the end, there are many ways to start building a trustworthy relationship with lenders but you need to keep in mind that the process won’t happen overnight.

If you have made up your mind and are determined to seek help from banks, try not to continuously apply for credits, too many credit applications will also hurt your credit score.

For now, try to start working on good saving habits to overcome the situation and start working towards your dreams.