Although the unemployment rate saw a decrease to 11.1 percent in June, that rate is still extremely high. Add to that the risk of potential decreases as we continue to struggle with coronavirus, and it is easy to see why emergency loans have risen in need.
But what if you were among the millions of workers who were unemployed? When it comes to applying for emergency loans with no work, we’ll discuss the choices you have.
When I’m unemployed, can I apply for a loan?
It depends. Even if you don’t have a job, there are two variables that can help your chances of being accepted for a personal loan: alternative income and your credit.
Alternative Income Option
If you have no evidence of employment due to a layoff, you can offer alternate income opportunities to your lender to show that you can pay back what you borrow. To reflect your wages, unemployment insurance may be used, as well as the following:
- Alimony/child support
- Spousal income (for co-signing or a joint personal loan)
- Retirement benefits/pension
- Social Security benefit payments
These can also qualify as revenue for certain lenders if you already have money in your savings account, or have freelance work or a pending job offer.
Your credit can be a big factor in whether you can get accepted with no work for an emergency loan. To see how trustworthy you are when it comes to handling your loans and paying back what you borrow, lenders may want to look at your financial history and credit score.
The higher your rank or score, the better for creditors. A strong credit score is usually 670 or above. Ultimately, it depends on the FICO scoring model used.
Credit scores are measured using credit report data that you can review every 12 months for free. If your history is in good condition, your score would be strange. To get your score where it needs to be it is important to review your credit and correct any inaccuracies immediately.
Remember: You can charge at least 100 points on your credit score on any past-due account that is more than 30 days old. Make sure to keep on top of your bills and correct any inaccurate details.
Options If a Personal Loan is not available for you or you don’t qualify.
If you simply don’t have the income to make a personal loan happen, if you don’t have a career, there are emergency loan alternatives.
Apply for a line of credit on home equity (HELOC)
If the above solutions do not suit your current situation and you are a homeowner, it might be possible for a home equity line of credit, or HELOC, to provide you with the emergency cash you need while you are searching for a job. A HELOC enables you to borrow in your home against the equity because it’s not dependent on your income. It’s a revolving credit line from which you can borrow as little or as much as you like.
Although a HELOC is not funded by your income, it uses your home as collateral. Be very vigilant and consider selecting another path for financial aid if you do not keep up with payments.
Get a personal joint loan
A mutual personal loan, like a co-signer, allows you to apply to someone who has financial security protection and good credit. The difference? Both borrowers own the loan, while the co-signer only shares obligation, not ownership, in the above case. Friends, families, and couples in which one person is unemployed will benefit from this, while the other has steady revenue.
Apply with a co-signer
If your credit score prevents you from being accepted for a personal loan while unemployed, using a co-signer can help. A friend or family member who has a decent credit score may be a co-signer. A greater chance of acceptance, stronger prospects for a lower interest rate, and probable access to a higher amount are the benefits of using a co-signer.
Remember: both you and your co-signer are liable for payments, so you’re both on the hook financially if you miss or lose one.
Additional Unemployed Aid
Circumstances often do not make emergency loans without work. You do not have a co-signer, or a home, or any extra revenue. From temporary help with your bills to federal assistance explicitly set up for COVID-19, it’s important to know what financial relief is available at this time.
To keep your financial well-being in check, do your homework, and do what you can. You know, choices, relaxation, and alternatives are open to you. To learn more, be sure to reach out to lenders.