Having a red mark on your credit report will make it very difficult to secure financing from banks and other financial institutions. Still, there are other cash sources you may access even with undesirable credit.
Here are six different ways to get the money you need, safely and legally:
1. Micro Financing
If you need to get your small business off the ground, microfinancing could help. These mini-loans, typically in the amount of RM1,000 to RM50,000 (loan tenure of one to ten years), are provided for business purposes to those who wouldn’t necessarily qualify for a traditional business loan.
What’s great about microfinancing is that even those with poor credit and lower income can make an application; however, their businesses would need to be defined as a micro enterprise to be eligible.
2. Supplementary Credit Cards
Even though you might not qualify for a credit card with a low credit rating, a relative or friend with good credit (and a primary credit card) can help you out with a supplementary card.
Since the credit limits on both cards are shared, the primary cardholder might assign a lower maximum on the supplementary card – thus, your access to funds may not necessarily be substantial. Still, it should help while you sort out your own finances.
3. Money from Life Insurance Policies
If you have a life insurance policy with a cash value built (e.g. investment-linked, endowment or whole life policy), you may extract money from it when in need. However, full withdrawal typically means that you are cancelling your policy and your insurance protection will cease. Some policies give you the option to withdraw a portion and still maintain your coverage.
Another option is to take out a loan on your policy’s cash value, where interest rates average 7% to 8% per annum. These types of loans usually do not take into account the borrower’s credit rating. But note that your policy may self-terminate if your premiums and loan interests accrue beyond the cash value remaining.
4. Employees Provident Fund (EPF)
Pulling money out of your EPF account comes with quite a bit restriction especially if you are not of age to make withdrawals. You may withdraw to pay for medical costs, reduce or redeem your housing loan balance, to perform hajj and for your education, among others.
However, you can’t withdraw for personal reasons. Plus, you’ll also need to consider if your need for funds outweigh thinning your retirement savings.
5. Find A Co-signer For A loan
With bad credit, the odds of obtaining a bank loan are rather low– and even if you do, your financing rate is likely to be on the high side. However, with the help of a co-signer, who takes on the responsibility to repay your loan in case of default, you’ll improve your chances of having a loan approved.
Getting someone of good credit to co-sign a loan with you might be tricky because it is a serious and burdensome undertaking for the co-signer.
6. Company Loan
Certain employers offer financing options to their employees for housing and car purchase, education and even personal reasons. Now whether or not they check your credit remains the prerogative of the company.
Often times, loans extended by employers will charge lower interests or none at all, which is good news for someone with financial troubles. Repayments are typically deducted directly from your salary, also a good thing, since you won’t have to monitor payments.
Now you know how to find money even with unattractive credit! But your current financial image does not have to remain sullied forever, so if you aren’t happy with your credit, you can definitely do something about it. To start improving your grade, check out our article on boosting credit scores.
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