Getting a line of credit with bad credit can be difficult if you have a poor payment history or have experienced other financial problems that have led to a bad credit score. Having a bad credit history can make it nearly impossible to use credit to pay for eduction or buy household items, vehicles, or homes. It is possible to obtain a limited line of credit, however, thanks to programs offered by buy-here-pay-here lenders, rental services, payday lenders, secured credit card companies, and credit rehabilitation programs.
In the short term, when bad credit prevents consumers from being able to borrow cash to pay for unexpected emergencies or bills, a payday loan may be an option. Payday lenders typically allow people with bad credit to borrow against expected income, but it often comes at a high repayment interest, which can be difficult to repay. Payday loans provide cash to pay for occasional needs, but over-reliance upon them can signify poor income management skills and can lead to more credit troubles.
When bad credit causes consumers to not be able to buy a vehicle or household items, there are ways to earn a line of credit through rental services and buy-here-pay-here programs. This allows you to finance larger purchases by making payments directly to a dealer. Generally a down payment or deposit is required and higher interest rates can apply, but for consumers who cannot get a line of credit, this may be the only option to buy furniture, appliances, vehicles, and other life necessities on credit.
For some consumers who need a line of credit with bad credit, the option to get a secured line of credit or a secured credit card works well. Banks and credit card companies generally have some form of secured credit card program that offer credit against a savings deposit made by the borrower. Some banks also allow for if a co-signer with good credit authorizes being a joint cardholder on the account.
There are also credit rehabilitation programs that allow consumers to earn a line of credit by making a small deposit or and then borrowing against a set amount with regular repayments over time. These credit programs gradually increase the line of credit as the consumer proves that the credit is being handled responsibly. In addition, the activity is reported to credit agencies to create a new positive history. Once this occurs, an unsecure line of credit can be established, which helps the consumer improve his credit score and rebuild a solid credit history.