Getting a Loan with Bad Credit in New Jersey (NJ)
Getting a loan in New Jersey with poor credit is possible. Here is what you need to know.
The average credit holder in New Jersey has a lot of room for improvement. Many New Jersey credit holders are in danger of becoming high-risk borrowers.
So what's the threshold for having poor credit?
Dipping below 650 will get you there. Anything lower than that and you're considered a risk. In addition to limited borrowing options, high-interest rates can make it difficult to pay back your loan.
If the above scenario applies to you, you're not alone. If you think you've run out of options, you're wrong.
Getting a loan with bad credit is possible, and you can improve your credit score along the way. Keep reading to learn how.
Getting a Loan in New Jersey with Bad Credit: You Have Options
Bad credit loans are no different than personal loans. If you have poor credit and want to borrow funds at an affordable rate, there are multiple options available to you. Here are a few.
Home Equity Loans
For homeowners seeking poor credit loans in NJ, consider taking out a home equity loan. If you have enough equity, it doesn't matter whether or not you have poor credit.
What if you don't own a home? A credit union is another option for those who are seeking bad credit loans in New Jersey. A low credit score won't ruin your chances of getting a loan, as other factors are taken into account.
The terms are a lot more flexible, and interest rates are typically lower. Even if your credit score is low, interest is capped at 18%.
Peer-to-Peer (P2P) Loans
Have you ever borrowed money from a friend or family member? A P2P loan is somewhat similar. Taking out a P2P loan through an online platform has its benefits.
The interest rates are manageable. But, one drawback is the process can be somewhat time-consuming and the terms often vary.
Based on your profile, individual investors will decide if you're worth the risk. Depending on your financial situation, you can receive the loan from a single investor or multiple investors.
Payday Loans and Installment Loans: Proceed with Caution
Both payday and installment loans are short-term loan options for borrowers with poor credit. Although they're typically fast and easy to obtain, payday loan terms are much shorter. The loan is paid back in 30 days and through a post-dated check.
Payday loans are illegal in New Jersey due to their high interest rates.
Installment loans are legal short-term loans for borrowers in NJ with bad credit. Similar to payday loans, they're also fast and easy to get. Their interest rates are very high, although not as high as payday loans.
Installment loans are usually paid back within a few months, through a check or direct withdrawal.
How to Improve Your Credit Score
And now for the really good news. Within a short amount of time, your score can improve dramatically.
There are actionable steps you can take to improve your credit score.
- No matter how tempting, don't open new credit accounts.
- Control your spending and pay your bills on time. If you have trouble remembering, set up automatic payments. It can raise your score in a matter of a few months.
- Keep your credit card balances as low as possible. Anything above 30% of your available credit and your score will suffer.
- If you happen to miss a payment, be sure to pay your bill within 30 days.
Bad Credit Loans Can Improve Your Credit Score
And last but not least: paying off bad credit loans are not excluded from the list of ways you can increase your credit score. Do you live in New Jersey and suffer from poor credit?
You don't have to worry. Feel free to contact us for advice about getting a loan with bad credit. We're here to help.
Related: New York Poor Credit Loans