Bad Credit Loans
Credit scores (which depend on history of credit and credibility of paying debt) play a vital role in this loan industry. It’s a kind of tool to analyze either a person can refund its debt or not. So, the credit score is the main factor on which the decision on lender relies.
There is a credit score range of every lender set by itself , but the average is here:
- 800-850: – Outstanding
- 740-799: – Very good
- 670-739: -Satisfactory
- 580-579: – Average
- 300-579: – Bad
What if you have bad credit? Are you not able to get a loan?
Indeed, you can take loans which are meant for bad credits named as bad credit loans. But these would secure loans where you need to provide some security as collateral. If you are in some urgency and need some money for repaying bills or for some routine life until your salary credits.
bad credit loans online
You can get a bad credit loan only when:
- Loan applications have been rejected due to a low credit score.
- You get failed to refund your previous lenders.
- There is left-behind credit card or bill payment.
- There is nothing you can do to cope with your debts
- You want to fix up your credit score.
What if you score less than 300?
You need to take a loan on a high rate of interest to clear your bad credit history.
For instance; if you are taking a loan on bad credit for a $10,000 with a term of 3 years then you need to pay 25% of interest where you need to pay around $390 per month and the sum of interest rate, you’ll pay for the whole amount would be $4313.
By contrast, if you are applying for the loan with good credit score then you’ll pay nearly $290 per month interest for $10,000 with term of 3 years that means total $3638 on whole loan.
How bad credit loans are dissimilar to payday loans?
In payday loans, you can borrow less than $1000 whereas $1000-$50,000 can be lent in personal loans with bad credit. The loan term for payday loans is between 2 –8 weeks but for personal loan it’s 1-5 years. And the biggest difference among them is APR which is 200%-400% and 36% or less for payday loans and personal loans for bad credit respectively.
What are some things that you must keep in your mind while taking loan on bad credit?
For applying for the loan, you must keep in mind that the lender will surely analyse your credit history to decide to lend money. So that is how the lender comes to know about your capability to return loan with interest.
Here are few things to take care of:
- Examine credit score: You must check your scores of at least 4 months and if there is any mistake in identity or address then resolve it. Else, if your bank account details are valid or not.
- Planning of refunding: Before taking loan, you must be clear with your budget that how you’ll manage your daily expenses along with debt.
- Search and get: There are an ample of lenders about whom you have to search and compare. You must check their requirements and your credibility accordingly.
- Be on your guard for the scams: Don’t share your details of the account who just ask you about your personal details and never believe who does not look out your credit details and just ask to pay some advance.
Bad credit loans can be processed in following steps:
- Approval in advance: Firstly, lender would give you the estimation of the rate of interest which depends on your credit scores. And for that you need clean history with no bankruptcies and constant earnings.
- Select terms for your loan: You need to understand all the details about a loan such as time duration of loan, amount you need to pay or any advance fee.
- Final inquiry and refunding of loan: Lender will do inquiries of your credit history which depends on their policies of hard check or soft check accordingly. If in any case you’ll not be able to refund on due date then extra charges would be added.