Having bad credit makes getting any type of loan more difficult. But, it’s not impossible. And if you’re drowning in unexpected medical expenses, you may not be able to wait until your credit improves.
Here are some tips to help you find a medical loan or other helpful option, in spite of your credit score.
Ask about payment arrangements
Kelley Long, a financial planner with Financial Finesse (a provider of workplace financial wellness benefits) suggests working directly with the healthcare provider to see if you can arrange a payment plan, especially if it’s for a service you’ve already received. Long says, “They are often more likely to allow you to pay off your balance over time without a credit check,” she says.
Personal Loans for Poor and Fair Credit
|Lending Partner||Minimum FICO Score||APR Range|
|No Min||36% – 299%*||Apply|
|No minimum||36% – 199%*||Apply|
|600||15.49% – 34.99%*||Apply|
|600||5.99% – 35.89%*||Apply|
|No Min||35% – 155%*||Apply|
|580||9.95% – 35.99%*||Apply|
Improve your credit score quickly
Long says you can improve your credit score fairly quickly by making sure you’re paying all your bills on time. She states, “Because that makes up 35% of your FICO score,” she says, adding “If there’s one particular thing, like an old bankruptcy, that’s holding your score down, see if you can meet with the lender to explain. They may be willing to work with you if the reason you have bad credit is due to a circumstance that no longer exists.”
There are other ways to improve your credit as well, such as paying down credit card debt and disputing incorrect or old marks on your credit report. Visit Supermoney for more tips on repairing your credit.
You might also consider a credit repair agency to help you get your score headed in the right direction.
Try a company that specializes in medical loans
There are companies that specialize in medical loans, such as LightStream, Prosper, and LendingClub, but borrowers with bad credit will probably not meet their eligibility criteria. However, there are lenders that cater to borrowers with bad credit regardless of the purpose of the loan. Complete this short form and see what rates and terms you qualify for. It’s free and it won’t hurt your credit score.
Is there an advantage to medical loans? Long says, “They are generally better than credit cards due to lower fixed rates, although they still may come with higher rates than, say, a home equity loan. The difference is that a home equity loan makes your home collateral, where a medical loan is not collateralized. What does that mean in plain English? If you don’t pay back your home equity loan, you could lose your house. Defaulting on an unsecured loan like a medical loan will ruin your credit, but you’d still have a roof over your head.”
You can get started searching for a variety of loans using Supermoney’s loan tool.
Apply for a credit card
People with bad credit are often able to get these four types of cards: unsecured credit cards, secured credit cards, department store cards and gas credit cards, and prepaid credit cards.
If you need to pay off a medical bill, the department store and gas cards won’t be very useful, and neither will secured credit cards since they require you to use your own money as collateral. And if you had your own money to pay the medical bill, you wouldn’t be in this situation in the first place!
That leaves you with unsecured credit cards. Supermoney’s top three options are Total VISA® Unsecured Credit Card, the Indigo Platinum Mastercard, and the Milestone Gold Mastercard. These cards have high fees and low credit limits, but they do accept applicants with poor credit scores.
|Unsecured Cards for Bad Credit||APR||Annual Fee|
|23.9%*||$35 to $75 depending on credit profile||Apply|
For more on credit cards for people with bad credit, read this article.
Get a home equity loans
You could use the equity in your home to pay off your medical bills. First, check out how much equity is available and what the terms of a home equity loan would be. Since this type of loan is backed by collateral (your home), your credit won’t be as important as it would be for another type of loan.
That said, you must have sufficient equity in your home to qualify for this kind of loan. The Federal Trade Commission says you may be able to borrow up to 85% of the appraised value of your home minus the amount you owe on your first mortgage.
Ask your family or friends for a loan
If there was ever a time to ask your loved ones for a loan, this might be it. Getting into medical debt isn’t typically something that can be avoided, and people who care about you will feel compassion for your situation and may be willing to help.
Of course, borrowing from family and friends always comes with risks, such as being unable to pay someone back on time and damaging the relationship. If possible, be sure the lender’s expectations are clear and that you can fulfill their requirements to avoid creating bad blood in the family.
Borrow from your 401K
You can borrow money from your retirement account, and — because you are borrowing money from yourself — you won’t be required to get a credit check or pay any interest. Of course, this will only work if you’ve saved enough to cover your medical expenses.
Long says the obvious pitfall with this option is you could be hurting your retirement prospects. She adds, “And if you are unable to pay the loan back for whatever reason, you could face tax consequences that further exacerbate your financial woes.”
If you’re ready to start looking at your funding options, here are two good places to start.
Use Supermoney’s loan engine to get preapproved loan offers. You can see what rates you qualify for without it hurting your credit score
Also, compare the rates and terms of leading lenders at Supermoney.