Many persons who rent their home as opposed to owning it are concerned that they are unable to access many forms of credit. Because they do not own a home, they cannot put it up for mortgage, and cannot offer it as collateral. As such, the credit necessary for large purchases or investments (such as college or a small business) can be difficult to obtain.
There are many ways around this. Firstly, any person is able to access a credit card. This form of loan is freely available to persons who are not a bad risk, and a person with good credit may be able to access a credit card with a low rate of interest and the option to make large purchases. However, the large rates of interest incurred by a credit card make this an untenable option for genuinely large purchases.
Another option for a person who rents a home is to go to a credit union. Credit unions are generally intended to loan money to the community and have options for persons without homes to put up as collateral. They may be able to put up future earnings or other large pieces of property as collateral, as well as other objects of value. Additionally, some credit unions have outreach programs which permit persons who rent their home to gain access to large quantities of credit without putting up collateral, especially if the loan is being taken out in order to start a project which benefits the community. Credit unions are usually the best option for persons without much collateral who need large amounts of money for a large purchase.
One last option, especially when a very large purchase is in order, is to have someone with large collateral co-sign the loan. This is a good option of a parent or other close relative has a good credit rating and is willing to take the risk of also shouldering the loan. It is not necessary for the co-signer to pay any of the loan payments even if the co-signer is putting up their property as collateral, although should the initial borrower fail to pay off the loan then the payments and potential foreclosure will fall to the co-signer. As such, it is important to select a co-signer who does not mind taking on the additional risk, and to ensure that the co-signer does not end up on the bad end of a loan.
Martin writes for ADM Online who offer bad credit loans for people with a wide range of circumstances, including homeowner and tenant loans .