Q:

How do you get a loan with bad credit?

A:

Quick Answer

People with bad credit can get loans by exploring alternative options to banks, such as credit unions or friends and family; bringing a cosigner on board; and using a home equity loan or a home equity line of credit, according to America’s Debt Help Organization. Bankrate recommends checking credit reports and fixing any errors and applying for loans at places where the requester already does business.

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Full Answer

America’s Debt Help Organization explains that while credit unions and banks have much in common, credit unions are nonprofit and member-owned. They may be more likely than banks to work with customers on the basis of their job stability and personal character rather than rejecting someone out of hand due to poor credit history. Specialized credit unions serve certain professions, such as teachers and veterans. Friends and family can also be a good source for loans, but such agreements carry the risk of harming the relationship. To cover all bases, a contract should be drawn up and signed. A cosigner can also be a friend or family member with good credit, but the risk still exists of a relationship going bad if payments are missed. Plus, the cosigner's credit may be severely damaged. Home equity lines of credit are relatively inexpensive loans and work well for people with stable incomes.

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