Losing a job without any savings at all could be one of the worst times of your life. How can you support yourself and your family while looking for a new job? If you have small children, the prospect could be worse. Depression and frustrations could come in, compounding your dire situation.
Remember that creditors will always check your income, credit score, and the ratio between debt and earnings.
Here are some ways to make sure that you can get credit despite your job status.
Find ways to earn
Do not allow joblessness from making you stop getting cash. The monthly salary that you receive is not the only way to get paid.
Apply for unemployment benefit immediately after you lose your work. You will receive regular financial assistance until you have a job again. The money you receive monthly is your steady income, which is one of the requirements to borrow money.
Use your skills and talents to make money so that you can prove your ability to pay your debts. If you know to bake a cake, you can make some to sell. You can also find a freelance job and earn extra.
People that own some stocks can earn dividends, and credit companies consider this another form of income that can help you meet your financial obligations. You can also provide information regarding an upcoming job so that lenders will see that you have a future income. However, the lenders will surely verify the information that you submit, so be honest. If you have excellent retirement benefits and you are close to retirement age, lenders might consider the money you can get from it as a future income.
Maintain a good credit score
Even if you are currently unemployed, credit companies can dig up your records. Make sure to make regular payments to all your debts. Delayed payments can arm your credit standing. Make sure to keep low balances on your credit card. Maxing out will reflect negatively on your credit rating.
How much of your extra income must go to your debts? Creditors have a way of knowing the money that you make and the debts that you must pay. If, after meeting your monthly dues, you can keep a considerable amount, they might consider you for the loan. In instances where the remaining amount is close to zero, you must be ready to find other loan options.
Loan alternatives for the unemployed
Are you unable to get an unsecured personal loan? Do not give up yet. Try applying for the following loan options.
You could apply for a credit card that you can use to purchase goods or get cash. Apply for a new one with a higher limit so that you can withdraw some money for your other expenses. The interest rate can be high, so use it only for your dire needs.
Line of credit
If you have a house or bank savings, you can use it to secure a line of credit. You can withdraw money from it, but not use it to purchase goods. Your bank can set a limit depending on the collateral. The interest rate is lower compared to that of a credit card, and the bank will only charge interest on the amount that you get.
However, aside from collateral, the bank would check your credit rating, and it has to good.
Paying what you owe can increase the lifespan of the line of credit, allowing you access to funds when you need it at lower charges.
Many financing agencies would gran you a loan as long as you have collateral. You can secure your loan using your assets such as a car, a house, a piece of land, or a building that you own. The catch is that the bank or lending company can seize the collateral if you fail to pay your debt. To avoid losing what you have, pay your dues regularly, and avoid balances.
Home equity loan
If you took a loan to buy a house and you have not paid in full yet, it is still possible to borrow money using the equity. If you have paid 40% of the loan amount, you can borrow against 20 % of the investment. When you have paid $200,000 already for a house lone of $500,000, you can take a loan for a minimum of $100,000 paying 200,000A house that cost you $500,000. Make sure the fees and interest rates are within the standard limits in your state.
However, borrowing money when you are jobless can bring risks. One, you might have difficulty meeting your repayment obligations, which can create more problems in the future. Two, the lender could give you stringent rates and repayment schemes because they face the risk of failing to collect payment for the loan.