So, you have unexpected bills that came up suddenly and find yourself in need of extra cash. But if your credit score is not great, your options for personal loans may be limited. Let’s discuss if you can get money quickly and easily here.
Loans for bad credit could be your option
Loans for bad credit are a kind of loans which are for individuals with poor credit score. When they face financial emergencies such as medical bills, car repairs, unemployment, debt consolidation, etc, it often becomes an option for them. Bad credit loans are for people whose credit score is not high enough to get a loan from a traditional personal loan services such as bank and credit unions.
Why is your credit score so important when borrowing money?
If you have ever missed a credit card payment or paid a bill late, it can have a negative impact on your credit score. Credit reporting agencies keep track of your credit score. If you have a history of not paying your bills on time, your score is likely to be low. The credit score is like a guideline for lenders and it is used to evaluate the likelihood that potential borrowers will pay loans back on time.
What can you do if you have poor credit score?
A poor credit score does not mean that you are out of options. Even if you have poor credit or no credit history at all, you still have options to get a loan. You should find a loan that focus on not only on your credit score but on your other financial factors.
What do other financial factors mean?
Meanwhile many lenders require a good or excellent credit score to decide to loan you money, there are also some other lenders who look at a balance of your income and outgo. This means that you can still borrow money even if your credit score was hurt by something you did 5 years ago.
Also, borrowing money and paying it back can help you rebuild your credit rating.
It is possible to borrow money!
Here are some options to get you through this time:
Be willing to take out a loan at a higher APR
People with a poor credit or no credit history may want to look for a lender that considers more than just your credit score when applying. These types of lenders may check your credit history during the loan application process, but they usually also look at other factors such as your income and employment history in order to help determine your ability to repay the loan.
Get a personal loan for bad credit
Some personal loans are available to people with poor credit score. There are usually very strict limits on the amount that can be borrowed. Since lenders are worried about defaulting without collateral or a guarantor, you should expect a much higher APR.
These personal loans can be quite expensive in the long run. It is recommended only for those who expect to repay the loan in a short period of time.
Get a secured personal loan
If you can guarantee some kind of collateral, many loan companies can be more flexible regarding your credit score because lenders offset the risk through collateral.
Secured personal loans are offered with the understanding that borrowers own a valuable asset, usually either a home or a car.
Try prequalifying
Some loan providers allow you to give information about yourself including information about your income, your housing status, and how you expect to use your loan. This can allow you to do a “soft credit check” and more easily find a fit.
Use a guarantor
If you have someone who can co-sign with you, it gives the loan company confidence and can help you get approved. Finding a guarantor with a good credit history can help you get a loan at a better rate or higher limit.
Moving forward
There are loan companies that are willing to loan money to you. They just expect a higher interest rate to take on the risk. Before you apply, think again about whether you can expect to repay the loan in a short period of time.
One important point that you should keep in mind is there is a scale for your credit defined by FICO. You should have a sense of where your score fits on this scale. This will affect your APR and possible size of the loan. So check your credit score to see where you stand when trying to qualify for a loan.
