The problem with ending up in a situation where you have a poor credit score is that you often need an infusion of cash to get back on your feet financially, yet lenders are reluctant to work with you because of your rating. It can be a vicious Catch-22.
What you need is a line of credit for bad credit, and that can be tricky.
Tips & Ideas for Getting a Line of Credit
If you own a home, you can try to squeeze a line of credit out of the equity that you have in it. Be very careful about this, however, because some people who use this method cannot repay the loan and end up losing their house, too. Plan carefully if you pursue this option.
It might be hard to go to a relative or friend at this needy time in your life, but one of the easiest ways for people with bad credit to get a line of credit is to find someone in your circle of friends and relatives who has deep pockets. If you can find someone who trusts you to repay a loan, this can be a low- or no-interest way to that hard needed cash.
Check around the Web for micro-lenders that could possibly beat the interest rates of even private individuals on the type of sites mentioned above. These micro-lenders, which are often non-profit organizations, usually work with businesses seeking start-up capital, if that is your situation.
Several new lending clearinghouses have sprung up on the Internet in recent days. These came about as people realized that they could make a little money by charging interest on small loans to people just like themselves, albeit with poor credit scores. Check out the site prosper.com as an example.
You might be able to persuade a total stranger to take a risk on you and give you a line of credit for bad credit. These sites play off a do-gooder type of vibe that has led to many loans for micro-enterprise abroad, for example. People in the Western world have quickly discovered that there are many needy people in their own backyard who might be a decent risk.
There has been a rush of offers in the secured and unsecured credit card markets. It will be hard to get an unsecured card with bad credit, but not impossible. Beware of absurdly high interest fees and other charges, such as maintenance and service fees.