PAYDAY LOANS – BAD CREDIT MUST NOT RUIN YOUR LIFE
Poor financial decisions often result in a bad credit rating that can follow you around for a long time. A wide range of financial emergencies can leave you incapacitated because most brick and mortar financial institutions will not lend to bad credit borrowers. Emergencies can range from medical, unemployment, bills and fines or vehicle damages. While most lenders will judge you on your bad credit, bad credit payday loans financiers will not. The latter looks at your current financial situation to gauge your ability to pay back the payday loan.
Bad credit is a term used to define your financial history if it has a record of less than stellar economic management or situation. An adverse credit rating may be brought on by missed credit obligations like for example, an unpaid loan, credit card or utility bill. This, in turn, will make most financial institution very hesitant to lend you cash. This poor credit rating suggests that you stand at high risk of defaulting on your financial obligations. What is strange though, is that if you have no borrowing history at all, most financial institutions will also consider you a risk, because this translates to a poor credit rating.
Circumstances that could cause a poor credit rating
- Missed bills and other defaults
Bills can pile up when you are going a rough financial patch. If your account is in default months on with no financial arrangements done to manage the debt, most lenders will take this into account when looking up your credit rating.
- Missed payments
This may include information on how long you have gone without missing payments, how late your late fees are and the total amount of unpaid debts in your financial records.
- Public records
A declaration of bankruptcy may stay visible on your credit record for over 10 years. Civic judgments and tax issue may also get listed on this report. This record contributes significantly to your overall financial score.
- Repossessions and foreclosure
These two indicate that you have defaulted on your installment loans. Once looked up, these will show that you are a financial risk when it comes to loans.
- High credit card transactions
If your cards are maxed out, this could indicate to lenders that you could walk into financial difficulties soon, consequently affecting your credit rating.
Fortunately, short-term payday loans with bad credit financiers are focused more on your ability to service loans lent to you in your present circumstances. These loans are perfect for anyone with a less than ideal credit history. Even with some poor financial decisions in your past, you could still find a good lender when it comes to payday loans for bad credit. You need to keep it in mind though that payday loans should be responsibly borrowed and paid back to prevent your credit score from hitting an all-time low.
A bad credit payday loan is a small short-term financial loan designed to help you overcome those unexpected economic challenges. And while most lenders will perform a soft credit check on you, payday financiers are more focused on dealing with people who have an adverse credit history.
Are there any alternatives to a bad credit payday loan?
Yes. These include:
- Guarantor loans
You can get these by asking a friend, acquaintance or a family member to act as your guarantor to allow you get a loan. This implies that they are liable in case you are unable to meet your loan obligations.
- Social lending sites
Most peer-to-peer lending sites involves lending of money amongst acquaintances. Their terms are softer than those of banks, though a poor credit score may still impact your ability to borrow.
- Credit unions
If you are eligible to join one of these, then you stand a good chance of getting an affordable loan quite easily.
- Secured loans
In this type of financing, you may borrow some amount of money with an asset as the collateral. Pawnbrokers are perfect for smaller amounts of unsecured loans. If you are unable to pay back the loan, there is the chance that you could lose your asset.
Advantages of payday loans with bad credit
- They are available when other financial solutions are closed to you due to a poor credit score
- They do not ask for reasons why you need the payday loan
- Payday loans are unsecured, keeping your assets safe from auctions or repossessions
- Very fast and easy to get
- Can be paid back in a matter of weeks unlike most bank loans
- Great solutions for times when you need little amounts of money to take you to the next month
Disadvantages of payday loans with bad credit
- Liable to misuse by borrowers who borrow frivolously
- They have high interests rates
- Need to be paid back fast
Alex is a former budget manager turned entrepreneur. He works mainly at home on his credit score advice website and writes a financial blog on the side. He hopes to expand his business into a full online lending company for bad credit as soon as he gets enough investors.