Bad credit loans are a relief option for consumers whose low credit scores limit their borrowing options.
Put another way: A bad credit loan, which is really just another name for a personal loan, can bail you out of a financial emergency, even if your credit score (something under 650) is a lot lower than you or most banks would like.
So if you suddenly need money to buy or repair a car; make payments on a medical bill or consolidate credit card debt, but don’t have a high enough credit score to get a loan from one of the big banks, don’t give up. There is help available.
Bad credit loans are treated the same as personal loans. They are money you borrow and pay back in fixed monthly installments. The loan could come from a bank, but if you’re looking for an affordable interest rate and flexible qualifying requirements.
What Is a Bad Credit Score?
Credit scores are an attempt to gauge the likelihood you will repay a loan. They range from 300-850. The higher your number, the more likely you will repay.
Bad credit scores start at 650 and go down from there. People in this category are considered high risk and pay the highest interest rates. They are prime candidates for bad credit loans.
The definition of a “good” and “bad” credit score does vary from lender to lender. Some won’t touch anyone with a credit score under 650, some actually market to consumers with a sub-650 score.
So it’s hard to say what makes you “good” or “bad” on the credit scoreboard, but the accepted range looks something like this:
- 760-850 – Excellent
- 700-759 – Very good
- 660-699 – Fair
- 620-659 – Poor
- Scores under 620 – Extremely poor
How to Get a Loan with Bad Credit
If this is not an emergency, the first step to get a loan with a bad credit is to improve your credit score so you can comfortably afford the loan you need.
Start by making on-time payments, especially on credit cards; and reduce the balance on cards to under 30% of the credit limit allowed. Finally, don’t apply for any new credit.
The combination of those three factors – on-time payment; low credit utilization; no new credit applications – account for 75% of your credit score. It’s not unrealistic to think that making an effort on those three fronts could raise your score by 100 points in as little as 3-6 months.
If, however, this is an emergency and your application for a loan has been turned down repeatedly due to poor credit or no credit, it might help to ask a bank or credit union loan officer for an in-person interview to convince them you are creditworthy.
If you get that interview, be sure you are prepared with documents that prove you’re a good risk. Lending institutions love stability. If you can show them that you’ve lived in the same house (or city) and worked the same job (preferably for the same employer) for several years, it definitely helps your case.
Pros and Cons of Bad Credit Loans
It makes sense to use caution when taking on any loan, but if you have bad credit, things aren’t good. Don’t make it worse.
Be careful who do you do business with on a bad credit loan. If the lender doesn’t require a credit check, doesn’t check your income; guarantees you’ll be approved; can’t be found for customer reviews or a Better Business Bureau ranking, it might be time to look elsewhere. Those are red-flag warnings that you might get scammed.
Closely examine the pros and cons of the situation before making a final decision.
Where To Get A Loan With Bad Credit
There are some outlets for people looking for bad credit loans, but it definitely will take some shopping around to find interest rates and repayment terms you can afford.
Ready to take the next step? Apply for a hassle-free online installment loan from Slick Cash Loan.
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