A bad credit loan is a relief funding option for people with a poor credit score. It can get you out of a financial crisis, even if you have a bad credit score. With that said, if you need cash immediately to pay a medical bill, buy or repair a car, or consolidate debt, but do not have enough credit to qualify for a loan, do not worry.
There’s help available. Although this option might not fall under the best terms possible, they can still be a considerable help when you need money fast. Bad credit personal loans are money you borrow and repay in monthly installments.
Read on to know more about personal loans for people with bad credit.
Getting A Loan With Bad Credit
If you don’t need the money for an emergency yet, take advantage of improving your credit score before getting a loan. You can begin by making timely payments, specifically on credit cards. However, if you need immediate cash, you can apply on Planet Loans to have the funds you need.
Also, you need to minimize the balance on credit cards to at least 30 percent of the allowed credit limit. Lastly, do not apply for new credit for the moment. These factors or determinants like no new credit applications, low credit utilization, and on-time payment, account for 75 percent of your credit score.
Moreover, it is not practical to believe that making an attempt to improve these factors could increase your credit score by a hundred points within 3 to 6 months. However, if you need the money for an emergency and your loan application has been rejected again and again because of no credit or poor credit, get the help of a credit union loan office or bank for an in-person interview to prove to them you are creditworthy.
Once you get the interview, ensure you are fully prepared with records and documents that show you are a good risk. Keep in mind that lenders love stability. So, if you can prove to them that you have worked the same job, lived in the same house for several years, then it will surely help your case.
Important Documents To Bring
The following are the common things you need to bring that will prove your creditworthiness:
- Certificate of Deposits, savings, bank statements for checkings
- Whether you receive or pay child support or alimony
- List of unsecured debts
- List of assets
- Details of your job history
- Tax returns
The good news is that not all of these things are needed. However, if you have a bad credit history, whatever you can show that proves you have become accountable with your money will be deemed a huge plus.
Also, take note that lenders usually ask questions regarding your credit history that might hit back adversely on you. Say, for instance:
- Your ethnic background
- Declared foreclosure judgment or bankruptcy
- Have any judgments against your items in the collection
- Had lawsuits
Although asking for your ethnic background would feel like violating anti-discrimination laws, yet it’s needed by the government so that they can ensure they are not charged excessive fees, routinely turned down, and keep information on lending to minorities.
The reason for the interview is to persuade the creditor that if you obtain a loan, you can make payments comfortably. Any proof or document that can back up that fact will surely work in your favor.
Bad Credit Personal Loans: Pros And Cons
When taking out any loan, it undoubtedly makes sense to be wary and use caution. However, if you have a poor credit score or history, keep in mind that things are not good. Thus, do not make it more serious or severe for you.
Thoroughly check the advantages and drawbacks of the situation before you make a final decision.
The following are the obvious advantages of bad credit loans:
- Lower interest rate compared to credit card debt
- Fast loan applications
- Many lender options
- Improve your credit score
- Repayment term length of about one to five years
The following are the drawbacks for bad credit loans:
- May not be licensed
- Collateral sometimes required
- Fees and penalties
- High-interest rates
Make sure you have various offers before you make a decision. Keep in mind that the competition gives you an opportunity to research and compare the company you eventually choose.
For people searching for bad credit loans, there are some outlets you can rely on. However, it surely will take a lot of time to shop around finding repayment terms and interest rates you can afford. Alternatively, you can opt to borrow money from close family and friends. Although from a relationship standpoint, it can be dangerous, it makes more sense from a loan-anxiety and financial standpoint since it’s simpler to get a break on terms and get approval.