Bad Credit Loans

Attempting to get approved for a loan with bad credit can be frustrating, and embarrassing. It doesn’t have to be though. First of all, you should determine if you really have bad credit. Do this by pulling a copy of our credit history, and doing some research to see where your credit score falls in relation to everyone else in the country. Some people believe they might have bad credit simply because they missed an electric bill once. Take some time and find out.

Okay, let’s assume you pulled your credit history and it turns out you did miss an electric bill, and a mortgage payment, and you had a car repossessed, and you have you delinquent student loans. This is what underwriters will call a “bad file”, or another term is a “soup sandwich”. Does this mean your days of borrowing are over? No. The hardest thing to realize is that there is a lender out there for anyone. Just know that you will probably have to pay higher interest rates for the money you want to borrow, so don’t borrow frivolously.

You have determined that you have bad credit and that you really need to borrow this money for something important; important enough to potentially pay 25% interest on this amount. Where do you look? The first question to ask yourself is whether or not you have collateral (i.e. a home, a car, retirement plan, or life insurance) that has equity and you can borrow against it. Some of these options are favorable since they do not require a credit application, which effectively levels the playing field for you and ensure that you won’t pay a different interest rate than everyone else. Those options are limited to life insurance, retirement plan, or share loan lending (share loans are loans taken out against deposit accounts you have at banks). If you don’t have anything you can pledge as collateral, then you can go the secured route. Lenders will usually allow you to put up a lump sum to act as a security deposit against money you would like to borrow. This is common with credit cards that are designed to help you build credit. Be careful with these as they are typically laced with hidden fees and charges designed to eat into your security deposit. Finally, applying for unsecured debt should be the last option. If you have a damaged credit history, this will mean that the loans either have shorter terms or higher interest rates.

Sometimes, the situate dictates that you have no choice and you have to accept these unfavorable terms. Just remember to pay on time and start building your credit back up. Try to make this a short period of your life, so that in the future you can enjoy credit on your own terms.