When you picture the warm weather, you probably see yourself out in the sun or on the water, enjoying a barbecue and relaxing with friends and family. That said, as we move into the summer months, you may be hit with some extra expenses, as people are inclined to get out more and spend money.
The problem is that money can get tight when you try to balance your budget with your plans for the warmer season. Fortunately, you have a few avenues to turn to for a loan, even if your credit score isn’t something to brag about.
Can you get a loan this spring or summer even with bad credit?
Credit scores below 580 are considered poor. Even if you aren’t able to get your score above that mark by the time warm weather rolls around, you still have plenty of options. Keep reading – we’ll explore different strategies for how to get a loan with bad credit as well as review alternative funding options.
7 options worth exploring if you have bad credit
If your credit score sends a chill down your spine when you’re looking for fun in the sun, don’t fret; you have several options to choose from. Just make sure you’re educated on each solution and read the terms and conditions carefully.
1. Personal loans
Personal loans are some of the most common solutions for helping people manage the various expenses that can pop up as we move into warmer months.
In fact, it’s not uncommon for many Americans to opt to take out a personal loan to pay for a vacation – which is especially prevalent among younger generations. Aside from footing a travel bill, a personal loan taken out in the spring or summer can also help with home improvements, educational courses, weddings, and offer greater financial flexibility overall.
If you’re thinking about taking out a personal loan, you’ll want to make sure you’re getting the best deal. One great way to help do that is to compare multiple loan offers with MoneyLion. Simply input some information and you’ll be presented with personalized offers for up to $50,000 based on your unique criteria.
2. Credit cards
Credit cards are another convenient option for managing expenses. With a credit card, you’ll obtain a line of credit, which you can borrow at any time up to your set limit. One great thing about credit cards is that they’re incredibly flexible. You can use them to pay for a vacation, to throw a party, upgrade your living space, and more.
The thing with credit cards however, is that they come with high APRs that can add up to significant costs over time. It’s best to pay off your entire balance each month to avoid paying high interest rates. To keep your credit score in good shape, you’ll also want to ensure that you’re staying on top of your payments.
Thinking about a credit card? MoneyLion makes it easy to compare personal credit card solutions for your criteria.
3. Cash advances
Cash advances are provided by some financing companies and online apps. They can be a great way to access funds without having to take out a loan.
If you’re anticipating needing extra cash for parties, going out with friends, gifts, weddings, or more, a cash advance product from MoneyLion may be just the thing to give you an extra bit of financial wiggle room. Get access to your hard-earned money before you get paid. You can receive up to $500 with InstacashSM with no interest, no credit check, and no mandatory fees.
PRO TIP! Don’t rack up debt when hit with unexpected expenses. Bridge the gap between paychecks with Instacash.
4. Credit builder loans
Credit builder loans tend to offer up to $1,000, and are mostly geared towards helping you build up your credit score. Credit builder loans work by having the borrower make monthly payments to a lender, who holds the loan amount in a secured account and reports the payment history to credit bureaus. Once fully repaid, the loan amount is released to the borrower.
A credit builder loan is a good option if you can’t access funding because of a low credit score. With this solution, you’ll have the opportunity to build credit by maintaining a record of on-time payments.
You can access a Credit Builder Loan with a MoneyLion WOW membership, alongside other exclusive benefits – from unlimited cashback on qualifying purchases1 to VIP deals2 and giveaways3.
5. Payday loans
Payday loans are short-term financing options, typically for fairly small amounts, which you repay after a short turn-around time (your next paycheck). While they’re a quick and easy way to get cash fast and can even be done online sometimes, they often come with high interest rates.
It’s best to resort to payday loans as a last resort, and explore other options first. It may even be a smarter move overall to invest your extra time into a side hustle for generating additional income. Consider apps in the gig economy that allow you to pick up flexible work – from Uber driving, food delivery, and even handyman work on demand.
6. Peer-to-peer lending
Rather than going through a bank, you can find individuals or businesses willing to participate in social lending or peer-to-peer lending. Some sites are specifically designed to match lenders with borrowers who have low credit scores. While it’s possible to find fair interest rates with this method, you may be prompted to pay additional fees. It’s best to make sure you’re reading the terms and conditions properly and aware of any costs you may incur.
7. Credit union and banks
Getting a personal loan from a credit union or bank could provide funding to cover larger expenses, and allow you to spread out repayments over an extended period.
One perk about working with a bank or credit union is that they tend to offer lower interest rates compared to online lenders. That said, it can be more difficult to obtain funding from a bank or credit union, as they tend to only approve borrowers who have fair to good credit.
Nevertheless, depending on where your credit score is, you may be able to give it a small bump to help you qualify for a credit or bank loan in the coming months. Offering collateral, such as your home if you own one is another strategy, although you should proceed with caution considering that if you default the risks could be severe.
How to improve your credit score
Your credit score can have a huge impact on the loans you’d be able to take out this summer. You may want to think about using your summer to improve your credit score so you can get better rates.
PRO TIP! A good credit score can lead to lower interest rates and increased borrowing power on loans and credit cards. MoneyLion offers a free and convenient way to find offers from our trusted partners to help you improve your credit.
Pay bills on time
The biggest factor that impacts your credit score is your payment history. Paying your bills on time consistently will get your score up.
Reduce debt
The credit that you use accounts for 30% of your credit score. If you’re regularly using a large portion of your available credit, banks can view your finances as being stretched a bit too thin. Reducing your debt can give banks confidence and raise your score.
Monitor and dispute any errors on the credit report
Don’t let errors stand! If you spot something wrong on your credit report, reach out to the credit unions immediately to rectify it.
How to maintain financial stability after securing a loan
Getting a loan might be the easy part — the true test comes after you’ve taken the money. To maintain or improve your credit score, you need to have your finances under control. Track your spending, save for the future, and budget enough for your needs — and some of your wants. Healthy financial habits like prioritizing on-time loan payments will help you avoid affecting your credit.
Loans to make this upcoming summer the best one yet
Sometimes, money can help buy a cozy level of comfort. If you’re looking to kick back and have fun this upcoming summer without the stress and anxiety of how to treat yourself without much money, know that there are options. You may still have access to cash advances, personal loans, and more — even with poor credit.
That said, it’s still a best practice to work on improving your credit score. Get to work on paying down existing debt, making all your payments on time, and practicing other smart credit moves.
FAQ
What are some loan options for people with bad credit?
While traditional bank loans may be difficult to obtain with poor credit, there are several alternative lending options to explore. These include online lenders that cater to borrowers with subprime credit scores, peer-to-peer lending platforms, credit-building loans or secured loans backed by collateral.
How can I improve my chances of getting approved for a loan with bad credit?
Lenders typically consider factors like credit score, income, and existing debt when evaluating applications. To increase your approval odds, work on paying down debts, providing proof of steady income, and having a co-signer with good credit if possible. Additionally, it can help to shop around and compare rates from multiple lenders.
What are the potential drawbacks of taking out a loan with bad credit?
Loans for borrowers with poor credit tend to come with higher interest rates and less favorable terms compared to traditional loans for borrowers with good credit. This means you’ll likely pay more in interest over the life of the loan. Some lenders may also require collateral or charge upfront fees. Make sure you understand all costs and terms before accepting any loan or funding offer.
