Are there any chances to find loans for people with poor credit? Bad credit is something that is extremely difficult to get rid of. Poor credit scores can arise due to thousands reasons, there might be sudden expenses for which the debtor had to take loans and he could not repay them back.
Maybe, a sudden job loss might have meant that the previous credit card dues have remained unpaid. At other times, it just might have been mismanagement of finances. Whatever the reason might be, does that mean a poor credit score will make someone ineligible to apply for a loan ever? Not at all. Some loans for people with poor credit are still available. One just needs to look at the right place.
How to Get Loans for People with Poor Credit?
There are many poor credit loans online companies that give money to people even if they have very poor credit. To start with, they understand that many things can go wrong which might lead to poor credit.
The process of getting loans with poor credit approved with these companies is quite simple. Most of the times, the process is completed in less than half a day. One simply has to fill out an online form. In the second step, some documents have to be provided to prove that the person is employed at the moment. After a few formalities, the money is transferred to the designated bank account, no questions asked. As of November 2017, Lending Point operates in 32 states and Washington, DC.
Private Bad Credit Direct Lenders
Sometimes a run of bad luck comes up through no fault of your own. However, as long as you’re working, there are resources to lend you a helping hand no matter if your credit is good or bad.
One can simply get easy cash for the moment and get their pressing financial problems solved for the time being. Lending Point LLC is one such a direct Atlanta based lender that gives poor credit loans online. Because they know that building and maintaining a healthy credit score is important in many ways, they help you by reporting to Experian and TransUnion.
Another online loan lender whose name speaks for itself is Bad Credit Loans offering people bad credit loans $500-$5,000. They have been working for quite a few years (since 1998 actually) and have helped lots of people get out of their bad credit situation. Their loans are primarily for the people who are struggling that really need the personal loans, not those with the spotless credit histories who are paying all their bills on time.
The logical question that arises is that how are these companies dealing with people when they know there is a chance that they might not get their money back?
The answer is that most of these loans are short term loans that have comparatively higher interest rates. Although the loan amounts are not that huge and can be repaid. Payday loans are one such kind of loans. Most of the time, payday loan lenders know that the debtor is sure to pay them back just because they do not want their interest rates rising. At other times, it is also possible that some people just treat these loans as a way of improving their credit history somewhat before they apply for a bigger loan later. Chances of that application for poor credit personal loan getting approved are much higher, if the creditors see that the previous loans have been duly paid off.
Bad credit loan provided by bank
Loans for people with poor credit are also provided by certain local banks. In a close knit community, or in suburban areas, it is far easier to come across banks that have their own loan policies and give loans to people with bad credit.
On the other hand, most major financial institutions are also opting for unsecured credits because being in the financial sector, they are aware of the inflation rates and can understand the scenario quite well regarding why people are opting for loans for people with poor credit.
Granted that some of these loans might have high interest, but it is something that a debtor just has to deal with if he is looking at the larger picture. Moreover, these poor credit loan amounts are not huge, so even combined with the interest, it mostly comes to manageable amounts and can slowly improve the credit over time.
How do I get a loan with bad credit? 7 Main rules
Alright, we all know that nobody likes to be judged. But when it comes to loans, it’s surely going to happen. Creditors are going to look deep into your credit history and make a decision about whether to lend to you or not. Lenders need to know 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.
Here are 7 main rules you should follow:
- Do NOT take out a payday loan.
- Consider a personal installment loan.
- If your credit is bad, fix It.
- Join a credit union.
- Opt for a secured loan.
- Find a co-signer.
- Know Your Credit Score and all it means.
Do NOT take out a payday loan.
Payday lenders will certainly provide you with a loan, but they will certainly make you pay for it. Also toy should expect a huge APR of 400% or even more. Such high rate APR loans trap low income borrowers in a cycle of predatory debt. Therefore, if you still have an idea to take out a payday loan, do not do it.
Consider a personal installment loan
Well, sometimes emergencies happen and you need funds immediately. While A payday loan could so be tempting there are non payday installment loans out there for you as a better option. These lenders consider many other personal factors when evaluating a loan application – not only your credit score, and you should be more lucky with them.
Build or Fix your credit score
Bad credit score simply means that you’re going to have to pay much more for your loan. It is better to build it up or fix it before taking a loan, if your current credit score is not so good.
Join a credit union
Credit unions are similar to banks, but when you have bad credit and apply for a loan, they don’t evaluate you only judging on your credit score. You need to be a member of the credit union, and therefore your goal is to convince them to give you that membership. Of course, credit unions look at your financial status, but they also make a decision based on many other personal factors like where you live, where you work, or where you went to school. You can look for credit unions near you through mycreditunion.gov.
Consider a secured loan
Secured loan means that, a borrower will offers some of his present asset as a collateral. It could be your car, home or even a boat. Lenders are very much likely to approve your loan because they know they can take possession of the collateral to recover their loss if the loan is not repaid. But you certainly should avoid short-term, high-interest title loans!
You also should be VERY careful when choosing collateral for a secured loan. If you default on the loan, you will lose that collateral.
Find a co-signer
If you can find someone with a good credit score who also trusts you, use him as a co-signer to repay the loan. In this case, the loan interest rate will be calculated based on the credit score of that person. Bear in mind that he will be equally responsible for payment, so if you fall behind, he will suffer for it too.
Know Your Credit Score and all it means
How can you find your credit score? And once you know it, how can you Repair Your Credit?
If you don’t know your FICO credit score, here is how to find it
- Sign up for a company like CreditKarma.com
- Ask your bank if they provide free credit scores
- Request one directly from FICO themselves, it’s free
When getting a personal loan, borrowers with a credit score above 720 typically pay an 11% interest rate.
Those with subprime credit pay almost three times as much – 29%.
Borrowers with a credit score below 550, many regular lenders will not approve a loan at all.
If you know your credit score, you’ll know how a lender will eveluate you. Typically, lenders classify borrowers according to the following categories:
- 720-850 – Great Credit
- 680-719 – Good Credit
- 630-679 – Fair Credit
- 550-629 – Subprime Credit
- 300-549 – Poor Credit
“Bulusu, Siri. “How Small Short-Term Loans Draw Vulnerable Borrowers Into Big Long-Term Debt.” Medill News Service. Accessed September 30, 2016,from http://news.medill.northwestern.edu/chicago/how-small-short-term-loans-draw-vulnerable-borrowers-into-big-long-term-debt/