Bad Credit Loans

Bad Credit Loans

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What Are Loans for Bad Credit?

When a borrower applies for a loan, the lender first goes through the credit score to determine whether or not there is any risk involved in lending money to the person. Now, what determines your credit score? Well, the way you repaid your past loans or your credit history is what determines your credit score. Now, if you have a short credit history, pending credit cards, or late payment history for past loans, then chances are that you have a poor credit score.

Loans given out to poor credit scores are called loans with bad credit. Some lenders give out money without digging much into the borrower's credit history. However, there are a few bad credit loans where the borrower needs to keep collateral with the lender, such as a home, car, or gold. But certain bad credit loans are free of such collateral. The lender gives money based on the borrower's income in such cases. Remember, the interest rates, fees, and other conditions of these loans vary from one borrower to the other.

How to Get Loans with a Bad Credit?

As we have already mentioned, taking personal loans for bad credit is more comfortable if you choose a direct lender or a lending firm. Usually, banks do not offer bad credit loans; hence, it is not even an option for most. Besides that, we will also discuss what you must consider when opting for them. Have a look:

  • Eligibility criteria: The eligibility requirements must not be that strict. When the criteria are strict, taking a loan becomes way too difficult. Try to go for those firms which offer cash advances at minimum income levels, credit score, and debt-to-income ratios. As you have a poor credit history, you cannot opt for lenders with high demand from the borrowers. Hence, when applying for a bad credit loan, make sure you check the eligibility criteria closely.
  • Interest rates and fees: Compare the interest rates and expenses of the lenders to see who is offering a bad credit loan at an affordable price. Some lenders take advantage of the situation and impose a very high-interest rate on bad credit loans. But not every lender is like that. Some offer bad credit loans at a much lower price, and that's what you should be looking for; try to find someone who understands your condition and asks for a reasonable interest rate and fees.
  • Repayment period: Usually, a bad credit loan repayment period is around a year. There are also some urgent loans for bad credit that come with a shorter repayment period. However, we would recommend you go for a longer repayment term because you will have ample time to pay back the money on time. With a short repayment term, borrowers often fail to pay back the loan and fall into the hands of debt.
  • Type of lender: Bad credit loans can be taken from credit unions, banks, and direct lenders. The most difficult of all these options is taking a bad credit loan from a bank. Banks do not grant such loans easily, and even if they do, it involves a lot of unnecessary checking and paperwork. Getting a bad credit loan from a credit union is also a great option if you have a close relationship with one. However, the best choice of all is a direct lender. Taking cash advances from online lenders will guarantee you instant money at an affordable interest rate.

Now that you know about the things that you must keep in mind while applying for online loans for bad credit, it's time that you learn about the requirements for such loans. Even though the requirements vary in each state, we have come up with a list of common conditions in most places. Here's the list:

Apply for instant Bad Credit Loans
Apply for instant Bad Credit Loans

  • The borrower must be of 18 years or above. Underage people are not allowed to fill the application.
  • The borrower must reside within the country's borders. To prove that they are a citizen of the country, they must provide address proof to the lender.
  • The borrower should have a fixed monthly income. As the lender is giving out cash irrespective of your bad credit, you need to show them your income details to know you will be able to pay it back on time.
  • You need to provide your identity proof documents too.
  • You must have an active contact number so that the lender can contact you whenever needed. An active email id is also a must for smoother communication.
  • Lastly, you must have an active bank account so that the money can be credited to your account once the loan gets approved.

Remember that some lenders have a few additional requirements. That is why it is always suggested that you check with the lender before applying for the loan.

What Makes Up a Bad Credit Score?

FISCO takes into consideration five important factors while calculating the credit score:

  • 35% of payment history
  • 30% of the amount owed
  • 15% length of credit history
  • 10% of new credit
  • 10% of credit mix

After considering these values, the score will range from 300 to 850. So now let's see what role each of these components play to decide your credit score:

  • Payment history: The payment history is decided on how consistently you have paid your previous loans. It also takes into consideration your bankruptcies and other payment issues. The time taken to solve these issues also matters. Moreover, you will have a bad credit score if you have failed to pay back your previous loans on time or take a long time to resolve the payment issues.

  • The amount owed: The amount you owe at the moment also plays a vital role. People who spend above their credit limit are usually considered bad credit borrowers. Even though this majorly focuses on your current debt amount, it also considers the number of accounts you hold. If you have a large debt from multiple sources, your credit score will be adversely affected.

  • Length of credit history: The time of your credit history also matters greatly. People with a high credit score usually have over ten years of credit history. Lenders also want to give money more to those with a longer credit history. Borrowers with a shorter credit history of fewer than three years are usually termed bad credit borrowers.

  • New credit: If you have opted for new credits multiple times, your credit score might be affected slightly. That is why it is recommended that you think twice before opting for new credit.

  • Credit mix: Lenders look for borrowers with a decent credit mix. For instance, you must be well capable of handling both revolving and installment credit. However, in the case of bad credit borrowers, their experience with the credit mix is quite poor, giving rise to a bad credit score.

Remember that overall poor performance in all of these or just in one or two can decide your credit score. Anything below 579 is considered as bad credit by FISCO. But thankfully, there are still ways to get bad credit loans guaranteed approval from online lenders!

Steps to Apply for a Loan with a Bad Credit

The steps to apply for loans for bad credit online are very easy to understand. The online platforms have made the whole application process so easy that even people who have zero ideas about loans can apply for one in no time. The best part is that you can apply for online bad credit loans from any corner of the world. All you need is a stable internet connection! Have a look below to know the steps of applying for a bad credit loan at our website:

  • Visit our website online.
  • Fill the online application for a bad credit loan.
  • Make sure you attach all the required documents with the form.
  • Now connect with the lender and discuss the requirements.
  • Once the loan is approved, the money will get credited to your bank account.

Make sure you follow the steps properly so that your application gets approved instantly!

Final Thought

We hope this blog helped you learn a lot about loans for people with bad credit. As you can see, getting bad credit loans is not that hard. Yes, finding a lender who offers bad credit loans at an affordable interest rate might take some time. But it is possible! Bad credit loans have made it easier for people to get hands-on urgent cash irrespective of their credit score. However, make sure you have a stable income because otherwise, the lender might never agree to give out cash. Also, pay proper attention to the requirements before applying. Now that you know all about bad credit loans, will you apply for one? Do share with us!

Frequently Asked Questions

  • Bad credit loans do not take more than two to three days to get approved. Certain platforms approve the loan even on the same day, giving people the luxury of getting instant cash during financial emergencies. Once the loan is approved, the money might take 1 to 4 business days to reach your bank account. It does not take more than five days usually. However, if there is any holiday or weekend, the time taken is slightly longer. But anyway, the overall process is quite fast!
  • As you know, a score below 579 is considered bad by FISCO. And at this score, the loans available are usually around $4,000 and not more. Loans amounting to $5,000 need a credit score of at least 600, which is neither poor nor good; it's somewhere in between. But certain lenders give out more than $4,000 even at a poor credit score. However, the interest rate can be a bit high in such a scenario.
  • Things that affect your credit score are:

    • Payment history
    • Amount owed
    • Length of credit history
    • New credit
    • Credit mix

    If you want to raise your credit score:

    1. Start by paying off all your past debts.
    2. Try to resolve the existing payment issues.
    3. Close the unnecessary credit accounts that you require no longer.
    4. Try to minimize creating new credit and gain experience in different credit fields for a better credit mix score.

    These are a few things that you can do to increase your credit score!
  • Some personal loans bad credit alternatives that you can find on our website are:

    • Title loans: If you want to borrow money against collateral security like a car or home, you can apply for title loans.
    • Payday loans: Payday loans will be perfect if you want instant cash for a short time interval.
    • Installment loans: If you want to pay back the borrowed amount in installments, this one should be your choice.

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