Since June 2020, the the unemployment rate was 11.1%*. This unemployment rate is higher, and in the midst of the current COVID-19 pandemic, job uncertainties have increased. Imagine a situation where you suddenly lost your job? There is no reason to panic right now, as you can search for emergency loans even if you don’t have a current job. You can use these funds until your next job.
How to get a loan if you are unemployed?
Two factors can influence your chances of benefiting from an emergency Personal loan
despite the lack of current employment. These are: your credit score and any other source of income.
Your credit plays a vital role in approving your emergency loan in case you are currently unemployed. Lenders will certainly review your credit history as well as your credit score to determine your ability to repay the loan amount used.
If you have a high credit score, financial lenders will definitely consider offering you a loan. On average, a credit score of 670 and above is considered extremely good. In the end, it’s also depends on rating model ** such as Vantage Score or FICO.
Credit scores are usually calculated using information from your credit reports. You can check the same on an annual basis and at no additional cost. If you have a good credit history, so do your chances of having a good credit rating. It is very important that you constantly check your credit score and resolve any issues with it in order to correct your credit score.
Always remember that any overdue amount that is more than 30 days old can cost you at least 100 points on your credit score.
- Alternative income options
If you have no proof of employment in the event of termination, then you can show your financial lender other sources of income to express your loan repayment capacity. Unemployment benefits can easily be used *** to represent your income status on the following:
- Pension as well as retirement benefits
- Income of your spouse in the event of recourse to a solidarity personal loan
- In case of handicap
- Alimony or child support
- Social security benefit payments
If you have some savings in your bank account, or if you are a freelancer with an independent source of income, or have a job offer coming up, you can even present them as your source of income to your financial lenders.
What if you don’t qualify for any loans?
If you don’t have any income to qualify for a personal loan, there are some alternatives for emergency loans. Here are some of the alternatives:
- Apply for a loan with the co-signer
If your credit score is preventing you from taking advantage of a Personal loan
when you are currently unemployed, having a co-signer while applying for the same can definitely help your cause. The co-signer can be a family member or friend with a good credit rating. The advantage of having a co-signer is that it increases your chances of getting your loan approved. You can try to get your loan at a lower interest rate and, if possible, get a larger loan amount.
Always remember that you and your co-signer are responsible for paying the loan amount. So, in the event that either of you misses these payments, you will be subject to a financial review.
- Obtain a joint personal loan
Just like a co-signer, you can still apply for a joint personal loan with anyone who has good financial security and a good credit rating.
The fundamental difference between the two is that the co-signer only shares the responsibility for repaying the loan and not the property. In the case of a joint personal loan, the two applicants are the owners. Using a joint personal loan can be beneficial for friends, couples and families where one member is unemployed while the other has a stable source of income.
- Apply for credit against your home or HELOC
If all of the above options don’t meet your requirements, and you own a home, a Home Equity Line of Credit (HELOC) can provide you with emergency cash flow. Credit allows you to borrow money against your home and is therefore not dependent on your income. It is basically a revolving line of credit where you can borrow according to your needs.
HELOC is not dependent on your income. But, he uses your home as collateral against the used credit. If you are unsure of making the repayments, you should be extremely careful before taking advantage of this credit and consider choosing other avenues for obtaining financial assistance.
The references:
* https://www.wsj.com/articles/june-jobs-report-coronavirus-2020-11593651420
