getting loan with bad credit

getting loan with bad credit

Getting a Loan with Bad Credit? It’s Possible. Here’s How.

Let’s face it: Nobody likes to be judged. But when it comes to loans, it’s going to happen. Creditors are going to look deep into your credit history and make a decision about whether or not to lend to you. Lenders need to determine how risky it would be to lend money to a borrower. And if you’ve got bad credit, you might expect to be shown the door right away.

But don’t panic! Even if you have bad credit, it’s still possible to get a loan. Here’s how.

Know Your Credit Score and Know What It Means

Lenders know your credit score, and you should too. When you’re applying for a loan, that three-digit FICO score is going to play a big role in whether or not you’re approved. If you don’t know your FICO score, there are plenty of ways you can find it. You can sign up for a company like CreditKarma.com; you can ask your bank if they provide free credit scores; you can even request one directly from FICO themselves—though they’ll make you pay for it.

So how can you find your credit score? And once you know it, how can you improve it? Check out the OppLoans ebook Credit Workbook: The OppLoans Guide to Understanding Your Credit, Credit Report and Credit Score to learn if you have bad, fair, or good credit—and then, what you can do about it!)

Once you know your credit score, you’ll know how a lender will “judge” you. Typically, they classify borrowers according to the following categories:

(You can read about the implications of your credit score here.)

When it comes to getting a personal loan, borrowers with a credit score above 720 typically pay an 11-percent interest rate. Those with subprime credit pay almost three times as much – 29 percent! For borrowers with a credit score below 550, many traditional lenders won’t offer a loan at all.

Sound Advice: Don’t despair! Borrowers with bad credit still have options like safe installment loans and certain “no credit check loans” (or “soft credit check loans”!)

If you happen to fall into the “poor credit” category, you’ll likely find your loan application has been turned down at the bank. However, you won’t have to look far to find people, both online and on the street, advertising “quick cash” for borrowers with bad credit. Many of these are payday loans, and they are dangerous.

Payday lenders will likely give you a loan, but they’ll make you pay for it. Literally. You can expect an APR of 350 percent or more. Rates that high are how payday loans trap low income borrowers in a cycle of predatory debt. [1] So if you’re thinking about taking out a payday loan, DON’T DO IT.

Worried you might be dealing with a predatory lender? Check out the warning signs in our ebook “How to Protect Yourself From Payday Loans & Predatory Lenders“.

If Your Credit Is Bad, Build It

Here’s the truth: Bad credit can mean that you’re going to have to pay more for a loan. It’s as simple as that. However, your credit score isn’t written in stone. If your credit is currently lower than you’d like, the best thing to do is build it up before taking out a loan.

We know, it sounds daunting. Also, it’s going to take a little bit of time. But don’t worry, you can do it by following these six steps.

Sound Advice: Stay below 30 percent of your credit card limit to boost your credit score.

Consider Personal Installment Lenders

Building credit sounds great, but sometimes emergencies happen and you need funds immediately. A payday loan might be tempting, but there are better options out there.

One place to look is with personal installment lenders. A personal installment loan can used to cover emergency expenses or to consolidate higher-interest debt. These lenders consider many factors when evaluating a loan application – not just your credit score –so you’ll probably have better luck with them. Also, not to toot our own horn, but OppLoans was recently rated the number one personal lender by LendingTree based on customer reviews. Toot toot!

Secured loans are a good way for borrowers with bad credit to boost their appeal when applying for a loan. With a secured loan, a borrower offers an asset – a home or car, for instance – as collateral. It makes lenders more likely to approve a loan because they know they can take possession of the asset to cover their losses if the loan is not repaid. Just make sure you avoid short-term, high-interest title loans! They are definitely not worth the risk.

Sound Advice – Be careful when choosing collateral for a secured loan. If you default on the loan, you will lose your collateral.

Credit unions are a good option for borrowers with bad credit. They’re like banks, but when you apply for a loan, they don’t evaluate you purely on your credit score. The trick, however, is that you have to be a member, so you have to convince them to grant you membership. They look at your financial health, but they also make a decision based on factors like where you live, where you work, or where you went to school. You can search for credit unions near you through mycreditunion.gov.

Sound Advice: Professional groups often form credit unions, so try to find one through your job.

Another option for borrowers with bad credit is to get a co-signer. With a co-signer, the interest rate for the loan will be calculated based on the credit rating of the person you sign with. So find someone with good credit who trusts you to repay the loan. But be careful. That person will be equally responsible for payment, so if you fall behind, they’ll suffer for it too.

Sound Advice: Cherish your co-signer. Payment information will be recorded to both of your credit reports.

At OppLoans, we believe that you deserve better than a payday loan. That’s why we offer personal installment loans with longer terms (6-36 months) and lower rates (up to 125 percent less) than your typical payday or title loan. Plus, our customers rate us an average of 4.8 out of 5 stars on LendingTree and Google.

Personal Loans For People With Bad Credit Or No Credit

Bad credit or no credit makes it tough – but not impossible – to get a loan. Credit unions, home equity and peer-to-peer loans or even debt consolidation with no loan could improve your credit rating and increase your future options.

Personal Loans For People With Bad Credit Or No Credit

You may have seen it on a sign somewhere or possibly on your TV or computer screen: “No credit, no problem!” Don’t believe it. The truth is, when you need to get a personal loan and you have no credit or bad credit, there definitely is a problem. It’s not an insurmountable one, but it is a problem nonetheless.

Having poor credit makes you a high-risk customer to major banks, credit unions and other major lending institutions. Those lenders have strict standards, and they rely on credit scores when picking their borrowers and calculating loan terms. Unless lenders are assured that their loans will be repaid, they simply won’t make the loan. In addition, heightened regulations and tighter internal controls by lenders in the wake of the Great Recession make today’s lending climate a tough one for borrowers.

So when your credit is bad, you may feel like you’re at the mercy of payday lenders and other sources of financial help, sources that will only loan you money if you agree to repay it at high, or “subprime,” interest rates. These loans are fool’s gold. They often you leave more in debt than you should be. In fact, payday loans are illegal in 13 states because of their predatory terms.

To understand how your credit affects your personal loan options, the best place to start is to understand your credit score. Free credit scores are now available at several online sites.

The National Foundation for Credit Counseling says that 60% of Americans haven’t checked their score in more than a year.

Some common signs of a bad credit score include:

  • You are paying higher interest rates than you see advertised
  • You have stopped trying to pay down debt and are satisfied making minimum payments on high interest credit cards
  • You have a history of late payments for housing, utilities or other monthly bills
  • Your checking account is overdrawn on a regular basis
  • You have problems getting a lease for housing
  • Cell phone companies won’t give you a contract

All of these have a negative effect on your credit score, making it more difficult to get a loan. Don’t get sucked into a situation that sounds too good to be true. If you have bad credit and need a loan there are options available but it will take a little time and research to find the one best suited to you.

Credit unions are similar to commercial banks in terms of their services, but they are owned by their members rather than by profit-seeking shareholders. Credit unions are nonprofit institutions, meaning they pass their earnings along to their members in the form of lower fees and borrowing costs and better customer service.

A credit union – especially one affiliated with your employer or one that is community-based – may be willing to look beyond a poor credit history and make a judgment about whether it will loan you money based on your character and your promise to repay, regardless of if you have bad credit or not. Think of them in the way you would a small community bank from years ago.

Although the recent recession forced a number of smaller credit unions around the country to merge with larger ones, almost all credit unions are actively looking for borrowers. If you can afford terms that match your credit history, you are likely to find a credit union somewhere willing to work with you.

If you are thinking of asking a credit union for a personal loan, look for one with which you have something in common. For example, if you are a veteran of the armed forces, you might want to approach the Navy Federal Credit Union. If you are a teacher, there are credit unions created by and for members of that profession.

By joining a credit union, you could position yourself for much more favorable loan terms, regardless of your credit score.

The Navy Federal Credit Union caps its personal-loan annual percentage rate (APR) for members at 18% — and that holds true even if your credit score is 600 or less.

In the same credit situation, a bad-credit borrower might receive a 36% APR from another lender.

Let’s say you have a three-year, $10,000 loan. Here is the total repayment:

The chance to save more than $3,000 makes it worth looking into enrolling in a credit union.

In Shakespeare’s “Hamlet,” the character Polonius admonishes his son Laertes to be “neither a borrower, nor a lender.” While this advice is prudent when dealing with strangers, it might be even more judicious if you’re thinking about borrowing from family members or friends. Not repaying a loan to a relative or close associate can poison relationships in ways that go far beyond a bad credit report.

Nevertheless, sometimes those closest to you are your best sources of funds and a family loan can benefit everyone involved. You should always treat any loan from someone you know just as if it were an important business transaction between you and a stranger. That means it should be formalized with clear documentation and legally recorded. To avoid future problems, create a written contract that includes the loan terms and interest rate, and what will happen if you cannot repay the debt.

If borrowing from a friend or relative is not possible, you can still approach someone with good credit who trusts your capacity to repay the loan and you can ask him or her to be a co-signer on a personal loan from a traditional lender. With a qualified co-signer, the lender will set the loan terms based on the credit score of the person with good credit, who will then be equally responsible for repayment. All payment information will be recorded on both yours and your co-signer’s credit reports, so if you default on the loan, or you’re late with payments, you will severely damage your co-signer’s credit score. However, if you make timely payments, your own score will improve, making it easier to obtain future loans without a co-signer.

If you have equity in your home, you can apply for a home equity loan or home equity line of credit (HELOC). Home equity is the difference between the amount your home can be sold for and your mortgage. Your home is used as collateral, and home equity loans can be obtained regardless of your credit score. The interest rate is usually low, because the loan is secured by the home. Also, the interest you pay on a home equity loan is usually tax-deductible.

Unlike a home equity loan, which is a lump sum of cash, a HELOC acts like any other credit account. You can access money when you need to, up to the loan’s credit limit, and you must pay it back according to a predetermined schedule. In both cases, it is important to remember that tapping your home equity puts your property in jeopardy if you don’t repay the debt. But if you are disciplined and have a reliable source of income, it is an inexpensive way to borrow from a reputable lender if you have bad credit.

One of the benefits of a home equity loan or HELOC is the extended loan term (15 or 30 years). The long term will substantially lower your payment, though you will pay more in interest over that time period.

Peer-to-peer lending, also known as person-to-person lending, is a relatively new loan form, having only been around since 2005. It’s an online platform that allows you to borrow directly from another individual rather than from an institution. Potential borrowers can post a loan listing on various peer-to-peer websites, indicating the amount wanted and what it’s for. Investors review the loan listings and choose the ones they wish to fund.

Your credit score is still a factor, but since an individual investor has much greater leeway in how it is to be weighed these loans are often more readily available for people with bad credit. Lending standards are significantly more lenient and interest rates are usually lower than those offered by traditional lenders. In addition, peer-to-peer websites help evaluate risk for the lender, while verifying the lender’s credentials for the borrower.

Can I Get a Loan with Bad Credit?

Many individuals, families, and businesses have been negatively impacted by bad credit. Because of the unstable economy, thousands of people have had to miss or submit late payments, leading to a bad credit report and score. This has impacted a very large number of people, and because of the amount of time needed to improve a score, many of those people are asking about how to get a loan with bad credit. We’re here to help you learn how you can escape your credit score now with these frequently asked questions.

Is getting a loan with bad credit an option?

For many, many people, getting a loan for a car, house, or major expense is not an option when they have poor credit. Loans often take into account your credit score, which can be damaged after every late payment, and a wide array of arbitrary-seeming factors. That’s why many people have turned to TitleMax to help them. It can be very frustrating for people to be denied a loan, especially when they know that they can make a payment based on their personal budgets.

How long can a bad decision or late payment impact my credit score?

As a general rule, late payments can continue to make an impact after as much as seven years. That means a missed payment can have a resounding impact on your score for most of a decade. A bankruptcy can be relevant for an entire decade, and unpaid taxes can lead to 15 years of bad credit! Personal Title loans allow people who’ve only made a handful of small, bad mistakes the opportunity to get a loan with bad credit.

Is it possible for the information in my credit report to be wrong?

Yes! Everyone makes mistakes, even banks and federal agencies. The problem is that dealing with negative or incorrect information in your credit report can be a very frustrating and often time-consuming process, requiring a great deal of mail, copying, and negotiating with the three major credit-reporting agencies. Also, unless you constantly maintain and watch your credit, it’s possible that something negative could happen while you’re not aware. If you’re ever in an identity theft situation, this can also have a horrible impact on your credit score, and at times, the victims must be responsible for taking care of these problem themselves.

For most people, the only way to fix a credit score is to wait. Doing it fast is often not an option. Illegally committing fraud to get a better score fast can have a resoundingly bad impact, so beware of those sorts of scams. Continue to pay bills on time, pay off any outstanding debt, never max out your credit cards, and continue to be patient. This can take several years. It’s sort of like gaining and losing weight; it’s easy to negatively impact it and very slow to improve it. The only exception is for people who’ve suffered from identity theft (for which other measures can be taken). Continue to watch and examine your credit report, and be sure to understand what everything means.

While continuing to pay off debt and pay all bills on time, many people suffer while trying to improve bad credit. Title Loans and Pawns give you the option to get the cash you need quickly, without having to wait several months or years for your credit to improve. When you already know you can pay off a loan and just need a big payment and some time to recover, the best solution might be to consider personal title loans. Bad credit can be improved while you maintain payments, and you don’t have to wait for banks to approve your loan.

Tips on how to get a loan with bad credit

When choosing where and when to get a personal loan, it’s important to find a company that’s safe and reputable. So-called “payday” loans can be a bad thing to get started with, often leading to too-large payments. With TitleMax®, you could have better options. The basic idea is that you use a car title (without liens) as collateral, leading your payments to be far more manageable. This title loan calculator can help tell you how much loan you can get. TitleMax® is one of the nation’s largest auto title lending companies, with car pawn, motorcycle title options. We have fast online applications and excellent customer service. Learn about how it works or read our frequently asked questions to find out more.

Getting a Home Equity Loan with Bad Credit

Home equity finance is a great way for property owners to turn the unencumbered value of their home into cash. For homeowners with bad credit, these particular loans provide a way to borrow money that is more likely to get approved and offers lower interest rates than traditional loans or revolving credit lines. Why? First, the home serves as the security, or collateral, and second, equity in the property may make up for the shortfall in your credit history. This is especially true for homeowners who have a large amount of equity in their home.

The downside is that you can expect to attract less favorable terms on your home equity financing, and the financing will come at a higher cost. Two examples: you may be forced to borrow a lower amount to minimize risk to the lender, and more collateral (greater equity) may be required to secure it. Lenders typically lend up to 80% of a home’s equity value. However, the more equity you’ve established, the more appealing your application will be. Given that your home is being used as collateral, you will be viewed as a lower-risk candidate if you own 20% or more of your home. This can be particularly helpful when you have a poor credit score. Here is what you need to know to secure the financing you need.

There are two main types of home equity finance. The first is a home-equity loan, whereby a single lump sum is borrowed and repaid in regular installments, typically with a fixed interest rate over a period of 25 to 30 years. The second is a home equity line of credit (HELOC), where the lender authorizes the borrower to withdraw money as needed. Most HELOCs have an adjustable rate, interest-only payments and a 10-year “draw” period, during which the borrower can access the funds. After the draw period ends, the outstanding balance must be repaid over a repayment period (typically 15 years). (For additional insights, read Home-Equity Loan vs. HELOC: The Difference and Choosing a Home-Equity Loan or Line of Credit.)

8 Steps to Home Equity Financing

Here are the steps you need to take to secure a home-equity loan or HELOC.

Get a copy of your credit report so you know exactly what you’re up against. (You’re entitled to a free one every year from credit reporting agencies: Experian, TransUnion and Equifax.) Check the report thoroughly to ensure there are no inaccuracies that are causing more harm to your score (you should do this routinely). (For more, see Check Your Credit Report.)

Gather your financial information (such as proof of income and investments), so it’s ready to present to lending institutions. They’ll want to see in black and white that you’re financially stable enough to support your loan – especially if you’ve got bad credit. If possible, pay off any outstanding debt that could adversely impact your application.

It’s logical to head straight to your existing lender for home equity finance – and given that you’re already a client, the lender may offer a more appealing rate. However, this isn’t guaranteed, particularly in the event that you have a bad credit report. The best rates are offered to those with good credit, so it always makes sense to shop around, particularly when poor credit is involved. Experts say it’s a good idea to work with a mortgage broker who can help you evaluate your choices and guide you to reputable lenders.

What is the purpose for which you are borrowing? And how much do you really need to borrow? It can be tempting to shoot for the stars to maximize your loan amount, perhaps to provide a financial cushion, but this comes with the temptation to spend it. If your spending habits are under control, it can make sense to “borrow up,” and by using a HELOC, you’re only paying interest on funds as they’re spent. However, in the case of a home-equity loan, you’ll be paying full interest (and principal) on the entire loan lump sum, in which case it probably pays to borrow specifically for your needs.

Don’t say “yes” to the first offer. By obtaining multiple quotes, you’ll be in a better position to negotiate a better rate. Present your first offer to another lending institution and see if it will beat it, and don’t forget to investigate all associated borrowing fees (such as processing and closing costs), so you don't get any rude surprises.

To sweeten the deal, it may be a good idea to bring in a co-signer. A co-signer uses his or her credit history and income to serve as a guarantor for the loan. Be sure to choose a co-signer with impressive credit, good job stability and considerable income to maximize your chance of approval.

As a last resort, you can turn to lenders offering subprime loans, which are easier to qualify for and targeted to poor-credit borrowers who don’t meet traditional lending requirements. Subprime lenders typically offer lower loan limits and higher rates of interest. However, these loans come with much greater risk and higher fees than conventional fixed rate loans and should be avoided if possible.

If you find that your poor credit history is really working against you, ask your lender why it's not cooperating and what it would like to see from you (and your credit report) in order to provide a better rate. Remember, it's never too late to turn your credit score around. You might consider placing your borrowing plans on hold while you implement steps to improve your rating. Mortgage lenders typically look at the dollar amount, payment history and “age” of your credit lines. Do you frequently open new accounts, miss payments and run up balances? Just changing one of these behaviors can positively affect your credit score. For more, see 10 Ways to Improve Your Credit Report and How can I improve my credit score?

A home-equity loan stretches mortgage debt on the property, which can leave a borrower in a vulnerable position (and unable to keep up with monthly repayments) should financial, income or employment circumstances suddenly change. Perhaps the biggest drawback associated with equity finance is that the bank could foreclose on your property if your ability to make repayments becomes compromised. And you may get hit with hefty late payment fees in the event that you fall behind. This jeopardizes your credit reputation even more, as banks will report your delinquency to credit reporting agencies.

Are you a homeowner with bad credit? You can still leverage the value in your home to obtain cash, but you may not enjoy as much borrowing freedom as someone with a squeaky-clean credit record. Despite the “instant cash” appeal of home equity finance, the decision to obtain it shouldn’t come lightly. It is, after all, more debt – and there are predator lenders ready to take advantage of people with less-than-stellar credit. Compare rates and deals at multiple lending institutions, and even consider engaging a reputable mortgage broker to connect you with viable options.

How to Get a Personal Loan With Bad Credit

If you are in need of some extra funds, but your credit scores don’t appear to be in tip-top shape, then you may be wondering how to get a personal loan or if it’s even possible. An ideal lender would be willing to look past your credit scores and be transparent when it comes to lending you money.

The good news is you can get bad credit loans that provide you with the cash you need even if your credit scores are less than perfect. Using a personal loan responsibly can help you get on top of your finances and focus on building or repairing your credit and paying off any debts you might have.

To find a personal loan with bad credit, you will need to do some research and choose where you apply wisely — we are here to help you understand how to do that.

While a personal loan can help you get your finances under control, it’s important to note that a loan may not be the answer to all your financial problems.

There is a lot of information to consider before you attempt getting a personal loan with bad credit including the information you will need, the types of personal loans available, and what scams and other fraudulent activity you need to be aware of during the process.

Here are some tips to help you learn how to get a loan with bad credit.

Gather Your Personal Information

As you think about how to get a personal loan, start collecting some information a lender may ask about. Here are some important things to know that will help you get prepared to apply for a personal loan.

The first thing you want to do before you apply for a loan is understand your credit and your credit scores because this will give you insight into the details a lender reviews when they pull your credit.

To see where your credit currently stands, you should check your credit scores for free on Credit.com. Checking your credit scores will not affect your credit in any way because checking your own credit scores is considered a soft inquiry or a soft pull.

You don’t need perfect credit, but your credit score impacts the terms and conditions you will qualify for, such as how much they are willing to loan you and what your interest rate will be for repayment. For example, bad credit loans will likely come with higher interest rates and may be issued for lower amounts.

If you see that your score is looking pretty lackluster, you may decide to improve it before applying for a loan. Some credit score improvement options you may consider include paying down debts, reviewing your credit reports for errors (and disputing any errors you find) and limiting the number of hard credit inquiries that are placed on your credit until your score rebounds. Improving your credit score before seeking a loan can help you receive much better rates.

You will also want to take a good look at your credit report from all three credit bureaus to make sure there are no mistakes and all the information is correct. If you see something wrong, you should report it and dispute it.

Each of the three credit bureaus- Equifax, Experian, and Transunion- have their own credit report for you to look at and sometimes the information between the three may slightly vary which means it is important that you check and monitor each one of them on a regular basis to track any changes or catch any instances of suspicious activity.

Checking your credit reports will also give you a good indication of where you would stand with a creditor and may offer you insight on what you need to do to begin repairing and rebuilding your credit before you begin to apply for any type of personal loan.

If you have decided to go ahead and proceed with applying for a personal loan, take the following into consideration regarding the next steps and what you will have to do to try and qualify for the personal loan:

Prove You Can Pay the Loan Back

It’s important to note that lenders will want to know you can repay the personal loan before they issue it, and the amount they are willing to lend often depends on your ability to repay them. It’s a good idea to show how you will be repaying them by offering proof of income or having a cosigner.

A cosigner is a person that is being asked to guarantee that the debt will be paid back. If the borrower fails to make the payments, then the creditor will turn to the cosigner to collect the money that is owed on the account.

The cosigner will need to have a good credit score and credit history and having a healthy length of time reported on their credit history may also help the chances of the creditor agreeing to make the loan.

If you find that you need to have a cosigner in order to get approved for the personal loan, then they will have to be able to provide the creditor with proof of income to prove that if you fail to make the payments, the cosigner will be able to.

Talk with Your Bank or Credit Union

Next, research minimum credit score requirements for personal loans from lenders in your area. A good place to start is with the bank or credit union you currently use, as they already have an understanding of your financial profile.

Something worth noting is that credit unions may have more flexible lending standards and may be more willing to offer you a small personal loan. If you have been at the same bank for years, consider asking the bank’s loan department how to get a loan. You may also want to inquire if your credit score would qualify you for a personal loan.

Consider Which Loans Are Best for You

Remember when we mentioned limiting the number of inquiries on your credit while you work to improve it? Here’s why:

Each loan application you submit triggers an inquiry into your credit, and hard inquiries can lower your credit score roughly five to ten points. So, when you decide to start applying for a personal loan, you will want to do your research and not apply for every loan you come across.

It’s a good idea to only apply for loans from a lender you trust and has lending standards you feel confident you can meet. You may be able to find the minimum credit score a lender requires for a personal loan on the lender’s website, or you can call the lender and speak with a representative.

Loans for bad credit might have higher interest rates or be capped at a lower amount because lenders are much more cautious when doing business with people with lower credit.

Secured personal loans are some of the most common types of loans and are generally used for a car or mortgage. When you borrow money from a secured personal loan, you are securing the amount that you are borrowing with one of your assets. Your asset then becomes collateral for the loan if you are unable to pay as agreed.

A secured personal loan is risky because they can take whatever you used as collateral if you do not maintain all of the payments on the account and pay on time as agreed upon.

Unsecured personal loans occur when you borrow money from the bank or financial institution, and you agree to make all the payments as discussed until the account is paid back in full.

This type of unsecured loan, when not paid as agreed upon, may incur additional fees on top of the amount owed, but they are not secured with an asset or any other type of collateral like in a secured personal loan agreement.

There are plenty of online lenders promising loans with no credit check to people who have damaged or bad credit. While this option might sound ideal, be cautious. These websites may be nothing more than advance fee loan scams. According to the Federal Trade Commission, a lender not seeming interested in your credit history is a big red flag and could indicate a fraudulent website.

If you are someone hoping to get a personal loan with bad credit, you may be the ideal target for scammers or fraudulent lenders. Consider contacting your state’s Department of Banking or Department of Financial Regulation to see if a lender is registered to do business within the state.

The Better Business Bureau can also tell you if any customers with bad credit have filed complaints against specific lenders.

One of the biggest consequences of having bad credit is being more susceptible to scams and other fraudulent behavior. Just remember, every legitimate lender will want some proof telling them that you will be able to pay back the loan.

Also, a red flag of a scam would be when the lender says you have first send them some kind of upfront payment before they can give you the personal loan. You will also want to be careful not to provide any sensitive information such as your social security number or bank account information without first obtaining the legal written documentation concerning the loan.

Let’s take a closer look at what it means to want a personal loan. Personal loans are typically loans given by a bank or other financial institution and are usually unsecured and are installment loans that can help the borrower do a number of things such as consolidating their debt or making a payment on something they weren’t expecting.

A payday loan offers a lower amount of money at an even higher interest rate than other personal loans. Payday loans are also to be paid back when the borrower receives their next paycheck which makes it a very short-term personal loan to help cover any unexpected expenses.

Payday loans also have an additional cost of anywhere between ten and thirty dollars for every one hundred you borrow, and these types of loans generally have a cap of about $500.

Payday loans do not require any kind of credit check from any of the three major credit bureaus which means obtaining one will have no initial effect on your credit score. However, if it is not paid back within the two to four-week timeframe, it is then sold to a debt collector and placed in collections which will show up on your credit report with adverse effects. Payday loans also usually come with extremely high-interest rates, so you will be paying much more back than the amount you initially borrowed. All considerations to make prior to obtaining a payday loan of any kind.

Next, we will determine what exactly qualifies as bad credit.

Credit scores can range depending on the model you are looking at. FICO scores, for example, fall within the range of 300 and 850. 300 would be the lowest spectrum of credit in this model and 850 would be the highest possible score you could have.

On average, creditors will say that a good credit score would be somewhere between the 700 and 850 mark. An okay or fair score would fall between 620 and 679, and a low to poor credit score will be anything falling under 580.

If you are in the lower spectrum, you may want to reconsider trying to get a personal loan because you will be faced with much higher interest rates, if you are approved for the loan at all.

If you find that you will not qualify for the traditional personal loan, peer-to-peer lending is another method of debt financing that can help enable individuals to borrow and lend money to other individuals without a financial institution as the middleman.

With peer-to-peer lending, the lender will take funds from their own money to lend to an individual after determining the amount and an agreed upon interest rate for repayment of the loan.

Peer-to-peer lending is often referred to as a type of crowdfunding because it is offering unsecured personal loans to people who may not otherwise be able to get a personal loan the traditional way.

The bottom line is to do your research before applying for any kind of personal loan when you are faced with bad credit. It is also recommended that you look at other alternatives such as attempting to rebuild your credit and build up your credit scores first, so you have a better experience and receive a better APR. Sometimes a personal loan and bad credit are best left separated, and a better look at your credit history with a credit check will yield more positive results.

Remember, a personal loan is not always the answer when it comes to your financial woes. Sometimes thinking more long-term may get you to arrive more successfully at your goals for your future financial health and freedom.

This article has been updated. It was originally published November 1, 2016.

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Silvia – I am not sure I understand your question. However, I would suggest you contact a reputable credit counseling agency for advice on how to resolve your debts. You can find one via the website of the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

i have a 615 score but a want to get a better score but just dont know how, i leave in nogales arizona , i need help..

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