There are times in our lives when we need a sudden influx of money for an emergency situation. Unfortunately, those with a 650 credit score may find themselves failing to get many types of loans. In these situations, a collateral loan may be required to help get them back on their feet again.

A 650 Credit Score Is Complex

Most credit score companies rate credit based on a scale of about 300-850. A score of 650 is a unique situation because it can be interpreted in many different ways. For example, FICO rates a 650 score as "fair" while other rate it as "subprime" or "poor." As a result a 650 credit score may make it hard to get high-quality unsecured loans. 

Unfortunately, those who are in an emergency situation probably don't have the time to fuss about with this situation. Whether they need money for a medical procedure or to help someone in their family, delay is a major problem. However, even if you do get an unsecured loan with a 650 credit score, there is a chance that you may suffer from high interest rates or the need of a large down payment.

As a result, many people who are searching for a good source of emergency funds often have to get collateral loans. These types of loans are a lifesaver for those who are in a surprise situation that requires a large amount of cash to solve.

Collateral Loans May Be Your Only Choice

Collateral loans are those that you get by using a piece of your personal property as collateral. For example, you may need to use your home or a vehicle as a piece of collateral on the loan. This process helps those with a 650 credit score get loans that are more fair to their difficult credit situation. It may also decrease the interest rate that you have to pay. As a result, you can get the money you need to handle a medical or personal emergency.

However, failure to pay the loan back could cause you to lose the property which you've used for collateral. As a result, it is important to carefully make all of your credit payments. Companies that offer collateral loans are usually adaptable to multiple types of debt situations and are willing to adjust your payment rates so that default situations don't happen.

So if you have a 650 credit score and don't have time to improve it before getting a loan, consider a collateral loan. While they aren't quite as desirable as an unsecured loan, they may be your only choice in what can be a trying situation.