Let's face the facts: No one likes being judged. However, with loans, it will happen. Creditors will look thoroughly into your credit history and then make their decision on whether to lend you money or not. Lenders must determine just how risky it will be to loan money to a specific borrower. If you have bad credit, then you may be shown the door immediately.
However, don't panic! It is still possible for you to get a loan, even if your credit is bad. Here is how to do it.
Know What Your Credit Score Is And Understand What It Means
Since lenders know what your credit score is, you need to also. When you apply for a loan, one thing that will play a major role or whether you are approved or not is the three-digit FICO score. If you currently don't what your FICO score is, there are numerous ways that you can find out what it is. You can use the Experian FreeCreditReport.com website to check your credit score absolutely free. Ask your bank whether they offer free credit scores or not; you even can ask for one directly from FICO – although you will to pay for it.
To qualify for a personal loan, those borrowers who have a credit score over 720 tend to charged an 11-percent interest rate. For those who have subprime credit, will be charge almost three times that – 29 percent! Borrowers who have credit scores under 550, and there are many traditional lenders who will not offer any loans.
Good Advice: Don't lose hope! Borrowers who have bad credit have options still such as safe installment loans along with some “no credit check loans” (or a soft credit check loan”).
Don't Take A Payday Loan Out
If you are in the “poor credit” category, most likely you will discover that the bank has turned down your loan application. However, you won't need to look very far to find individuals, on the street and online, with “quick cash” loans for borrowers who have bad credit. A lot of them are payday loans, which are dangerous.
Most likely there are payday lenders who will loan money to you, but they will literally make you pay dearly for it. You can expect a 350 percent or higher APR. Those high rates are the way that low income borrowers are trapped by payday loans in a predatory debt cycle. So f you are considering getting a payday loan, definitely do not do it!
If You Have Bad Credit, Build It
The truth of the matter is, bad credit may mean you have to pay more for your loan. It is just that simple. However, remember that your credit score is not written in stone. If currently your credit is lower than what you want it to be, the best thing to do before taking a loan out it to build it up.
We understand that it sounds overwhelming. It also will take some time. However, you don't need to worry. Just follow the steps below.
Sound Advice: To give your credit score a boost, make sure to say under 30 percent of what your credit card limit is.
Consider A Personal Installment Lender
It sounds great to build credit. However, emergencies occur sometimes and you will need to immediately have your funds. You may be tempted by a payday loan, but better options are available.
A personal installment lender is another place to potentially get a bad credit loan. You can use a personal installment loan to cover your emergency expense or to consolidate your higher-interest debt. Many factors are considered by these lenders when they evaluate a loan application – beyond your credit score. Therefore, you probably will have better luck going through them.
Choose a Secured Loan
A good way that a borrow with bad credit can increase their appeal when they are applying for a loan is to opt for a secured loan. On a secured loan, the borrow will offer an asset of theirs – such as a car or home – as collateral for the loan. That makes it more likely that the lender will approve your loan since they know they will be able to take possession of your asset for covering their losses in case the loan isn't repaid. A title loan is a good idea and could be worth considering. If you’re interested read this and you will better understand, what do you need for a title loan.
Just be sure that you avoid high-interest, short-term title loans. Those definitely are not worth the risk.
Become A Member Of A Credit Union
Another good option to consider for borrows who have bad credit are credit unions. They are similar to bans. However, when you apply for a loan with them, they don't just evaluate you based on your credit score. However, you need to be a member, which means you need to convince them to approve your membership. They will look at your finances, but also make their decision based on other factor such as where you attended school, where you work, and where you live. You can use mycreditunion.gov to look for credit unions.