Increased regulations in the credit industry, combined with the growing number of risk averse lenders, has resulted in a huge reduction in available credit. Those who have less than perfect credit can well find that they can’t get credit at all unless they receive a pre approved letter from a sub prime lender touting 79.95 interest rates. 25% of Americans have no access to credit, by either not having an established a credit history or though acquiring a bad one.
Society remains dominated though by the need to have a good credit score. The best way for those without a credit history to obtain credit is to establish a credit history, ironically by using credit. Those with bad credit need to work to improve their credit. Others are just desperate to use credit as need immediate access to funds, at any cost.
There are various options open to those who can’t get credit. Considering those who cannot get credit as they have no credit history, the best approach is to obtain a loan with a co-signer whom the bank deem responsible and who has good credit. Credit cards have been withdrawn to the under 21’s unless they can provide proof of a regular income, or a co-signer to stand as guarantor, as lenders have no way of assessing the risk factor.
A co-signed loan, or a store card, will enable those without credit to begin to establish a credit history, as will the use of secured credit cards with a deposit check equal to the line of credit held by the bank.
Those who have bad credit are increasingly seeing their options limited as sub prime lenders are withdrawing some of their products in the wake of the new credit card reforms, and the limitations imposed on the fees they charge. Those who do offer bad credit cards are almost certain to grant them if you can pay the fees.
If you are tempted to use a sub prime lender then take the time to research them first and be aware of their fees and reputations. Even with new regulations to protect consumers, some sub prime lenders have still been imaginatively circumventing them as seen in the tactics of both First Premier Bank and the New Millennium Bank. Considering a bad credit card should really be the option of last resort, and secured cards can be a much better choice.
Credit options open to those without bank accounts are very limited. Pawn shops provide interest bearing loans in return for collateral which can be redeemed when the loan is paid in full, usually after 30 days. Pawn brokers do not run credit checks on lenders as they hold the collateral as security against the loan. Pay day loans are available to those with bank accounts and require no credit check. Diligent searching should unearth some pay day loan lenders with either free, or very low, introductory offers to first time users.
Some mainstream financial institutions such as Wells Fargo are now offering the equivalent of advance pay day loans to borrowers, though these are now under criticism from consumer protection groups. However banks are not subject to the same State regulations as pay day loan lenders so their charges can be higher, and seeking out a fair pay day loan lender could be a more affordable choice.
For those desperate to obtain credit at any cost these are the most viable options: secured credit cards; co-signed loans; pay day loans; pawn shop loans; and credit cards for bad credit. Those who have a bad credit score will be able to obtain mainstream finance offers again once they improve their score and can demonstrate responsible use of credit.