You may have run into some trouble with your finances in the past. A single mistake can linger on your credit report for years – especially if it was a big mistakes like having a car repossessed. Having a poor credit score can make it very hard to borrow money from traditional banks, even if your income is stable.

Fortunately, if you have bad credit, you do still have some options about how to borrow money. Traditional banks tend to have high requirements and don’t tolerate much risk in their borrowers – this means they don’t make loans to individuals with bad credit. But there are still options out there.

Credit Unions

While credit unions have some similarities to traditional banks, they are not businesses tasked with making money. Instead, credit unions are a financial collective. A credit union formed by people in a particular area or who work for a specific industry will cater to those individuals as a non-profit.

The funds deposited by some are lent to others and repaid. Credit unions may have lower limits for things like credit scores and may lend money to those with bad credit, especially if you have been a member of the credit union for some time.

Collateral Loans

A collateral, or secured, loan is another option for those with bad credit, but who have some assets. A collateral loan ties the funds you’re receiving to an item of value. You might use your car title, for example, as collateral for a loan. If you repay the loan normally, you’re all set. But if you fail to repay the loan, the lender is able to take your collateral – in this case your car – as another form of payment.

Since secured loans are tied to something else of value, lenders are taking far less risk than they would be with an unsecured line of credit that they are just trusting you to repay. Secured loans are available through specialty lenders, pawnshops, and even some traditional banks.

Online Lenders

The internet has made it easier to access a wide range of lenders outside of what is available in your town or city. Online lenders are nimble because they don’t have to pay for brick and mortar buildings or thousands of employees. They can be housed anywhere in the world and have flexibility in how they do business.

Some online lenders deal specifically with borrowers who have had credit trouble in the past. These bad credit lenders have a collection of options available that work like a traditional loan or line of credit. You apply, you work through the approval process with the lender, the lender deposits funds in your account as soon as the next business day with an E-transfer loan and you’re all set with your money and you make monthly payments to satisfy the requirements of the loan.

Peer-to-Peer Lenders
While a credit union is a collective, peer to peer lending sites are more of a private investment option. Those with extra cash who are willing to take a bit of a risk put money into the lending pool. Borrowers apply for loans and the funds invested by others are used to provide the loans.

When the loans are paid back with interest, the original investor winds up making a profit in exchange for his willingness to invest in the first place. A peer lending money eliminates banks all together, and peer lending models often accept loan applications from those with bad credit if they are able to verify other requirements like steady income.

Retirement Loan
A final option for those with bad credit is a retirement loan. If you have retirement funds through your work, you may be able to borrow from those funds, much like a bank loan. Instead of borrowing a bank or credit union’s money, however, you will be borrowing your own funds.

This is not a withdrawal, which has specific requirements and often penalties. Instead, it is a loan that is made with your own 401k as collateral. You’re essentially borrowing your own money and paying it back over time. These loans often don’t require any credit check at all, but be aware that borrowing rom your 401 might mean diminishing your own retirement income. Also if you leave or lose your job before the loan is repaid in full, the entire loan amount may become due in a single payment.