How To Get An Emergency Loan Product With Bad Credit

Life is unpredictable, and unexpected expenses can hit when we least expect them. If you’re a gig worker with bad credit, finding an emergency loan will surely be difficult for you. That’s because your negative financial history and an unstable job don’t appeal to the banks when you need emergency bad credit loans.  

We understand the stress that comes with urgent bills and the frustration of being turned away by standard lenders due to credit scores or irregular income. 

Therefore, this guide is here to help you check out the options for securing an emergency loan product despite the challenges. Let us walk you through lenders that consider gig income, explain loan product requirements, and offer advice to improve your chances of approval. 

Keep reading, and let’s check what choices you have as a person with bad credit.

Emergency Loan Options for Gig Workers with Bad Credit

As you may know, a gig worker with bad credit is not the ideal loan candidate for banks and conventional financial institutes. Even when your monthly income is good enough, not having standard employment can dim your chances of getting an emergency loan. 

A good credit score is above 670, and most people with irregular employment can’t maintain it. But not all hope is lost yet. Here are some emergency bad credit loan products you can avail:

1. Cash Advances 

Cash advances from funders are arguably the easiest way for gig workers to get a loan when they don’t have a good credit score. These funders have a minimal monthly earning limit and don’t check your past financial history while lending short-term advances. 

Talking about cash advance apps, Fundo is a smart cash advance platform with the basic requirement of you making $1500 a month and being employed for the past three months, either as a gig worker or full-time. If you meet these requirements, you can get a cash advance of up to $10,000 from Fundo with easy repayment terms. 

For example, if you’ve earned $1500 this week delivering food, you might be able to get an advance of $500 to cover an unexpected expense. Usually, no credit check is involved, so bad credit won’t hinder you here. Since these platforms lend you money for a limited period, they don’t bother getting too much into your past money management records.

2. Credit Union Loans

Another option for emergency bad credit loans is going to credit unions. These are member-owned financial institutions that present more flexible lending options than banks. Even with bad credit, you can qualify for a small loan by becoming a member. As credit unions consider your broader financial situation, including consistent income from gig work, bad credit doesn’t shoo them away. 

If you’ve been depositing your earnings into a credit union account, they will view this favorably. For instance, if you need a $1,000 loan for car repairs, a credit union will approve your application based on your regular deposits and relationship with them. Also, interest rates are usually lower with these unions, so their repayments are more manageable.

3. Peer-to-Peer Lending Platforms

Peer-to-peer lending platforms connect you as a borrower, with individual investors whose business strategy is to give off small loans and earn interest on them. Websites like LendingClub and Prosper help you create a loan listing explaining your financial needs. So even with bad credit, you can secure funding for a bad credit loan if you show consistent gig income and a solid repayment plan. 

For instance, if you urgently need $2,000 for medical expenses, detailing how your freelance earnings will cover monthly payments can strike a chord with these investors. However, since these are usually unregulated, know that their interest rates vary based on your profile, so review all terms before accepting an offer. 

4. Secured Personal Loans

Secured personal loans are among the quickest emergency bad credit loans. That’s because in such an agreement, you offer collateral to back the loan and reduce the lender’s risk. Assets like your car, savings, or valuable equipment can serve as collateral. 

If you own your vehicle outright, you can use it to get a cash loan for emergency expenses. Depending on their rules, the lender may offer a loan amount equivalent to a percentage of your car’s value. Although using a collateral asset increases your chances of approval despite bad credit, it has some risks. Failing to repay the loan could result in losing your collateral, so only opt for this loan if you’re confident about repaying within the set time.

How to Improve Your Chances for Emergency Bad Credit Loans?

Now that you know the choices you have for emergency bad credit loans, let’s see how to strengthen your application. A financial institute or app could reject your form if you don’t meet their criteria, so it’s better to go in all prepared. 

Here are a few steps that can improve your chances for emergency bad credit loans: 

Provide Proof of Income

Lenders need assurance that you have a consistent flow of earnings to repay the loan. So, when going for a loan, gather documentation that shows your regular income from gig work. The standard documents can include bank statements with deposits from platforms like Uber, Lyft, or freelance marketplaces. If you deliver food or provide ride-sharing services, compile your weekly or monthly earnings reports. Having this information handy demonstrates financial stability, which can make lenders more comfortable approving your loan despite a low credit score.

Offer Collateral

As explained earlier, offering collateral, as an asset you pledge to the lender as security for the loan, is another strategy to boost your loan application. Common forms include vehicles, equipment, or savings accounts. Going down this lane reduces the lender’s risk because they have something of value to claim if you default. For example, by pledging a vehicle worth $5,000, you might obtain a loan of $3,000 with more favorable terms. 

Use a Co-signer

Using a co-signer as a guarantee can also boost your approval chances. A co-signer should have good credit and agree to take responsibility for the loan if you’re unable to repay it. This person could be a family member or a close friend who trusts your commitment to repay the debt. Their strong credit history can offset your bad credit in the eyes of the lender. For instance, if your sibling with a solid credit score co-signs, the lender could offer better terms or a lower interest rate. 

Prepare a Solid Financial Statement

And lastly, your financial responsibility is the biggest green flag for lenders. Your financial statement provides a good look into your financial situation, including income, expenses, assets, and debts. This detailed financial statement will show lenders that you’re organized and serious about managing your finances. When compiling a statement, include all sources of income from your gig work and any other jobs. Outline your monthly expenses to highlight your ability to budget. Mastering your credit score as a gig worker is also easy if you make timely payments and keep your card utilization low, so look into that as well. 

FAQs

How can I prove my income as a gig worker?

You can do this by providing bank statements that show deposits from gig platforms and payment summaries from the apps you work with. Or, if you’re a freelancer, invoices from your clients would work.  

Are payday loans a good option for emergency cash?

Payday loans are not highly recommended because of their high interest rates and fees. They can get you into a cycle of debt that’s hard to escape. So, it’s better to consider options like credit union loans, cash advances, or borrowing from family and friends.

What companies offer cash advances to gig workers?

Companies like Earnin, Fundo, Dave, and Brigit offer cash advances to gig workers.