Personal Loans for Bad Credit
Bad credit can ruin your life, making it next to impossible to acquire a new car, a personal loan, a home or an apartment. You will not have access to any new credit card due to your adverse credit history. According to FICO, an excellent credit score is above 750 while a fair to poor one is from 659 and below. The Fair Isaac Corporation creates FICO scores, and lenders can purchase them from TransUnion, Experian and Equifax, which are all major credit reporting agencies. These scores are influenced by how you pay your bills as well as debt accumulation. FICO credit scores consider the following when calculating your credit score.
- Payment history: 35% of your credit score
- Credit owed: 30% of your credit score
- Length of credit history: 15% of your credit score
- Recent requests for loans: 10% of your credit score
- Types of loans in use: 10% of your credit score
A poor credit rating will also play a prominent role in enforcing a high interest rate on any loan you may receive from banking institutions. This is because lenders will view you as a risk. An emergency financial need may exacerbate this situation.
Common signs of a bad credit score rating
- Housing companies will not avail you a lease for housing
- Your loans tend to have a higher interest rate than advertised
- You have a long drawn history of late payments when it comes to utility bills and other monthly bills
- You have a hard time getting a contract from a cell phone company
- Your bank account is perpetually overdrawn
- You are at your wits end with bad debt, and you keep making high interest credit card payments
People with a fair to bad credit rating makeup at least 56% of the American population. Personal loans for people with bad credit lenders have moved away from this traditional bank model and embraced an online structure instead. From the comfort of your sofa you can:
- Request for a personal loan even if your credit score is nothing to write home about
- Make payments from your laptop or mobile device for your received loan
- Access and review or update your account with your lender anytime when necessary
- Set up an auto-pay structure or make a one-time payment to clear your loan.
Personal loans lenders do not weigh your ability to repay your loan based on your poor credit score. They understand that credit scores are tools used by lenders to gauge your stability and ability to repay yours as per your past. If you are earning an income, then you could pay your loan in the present. These lenders do not charge an application fee to process your personal loans for people with bad credit either. The service offered is free and the only payment made is an interest on the loan, once your loan is approved. These lenders will conduct a credit investigation to ascertain your legibility for the loan.
Details needed when borrowing personal loan for bad credit
- Financial information
You will be required to provide proof of income and employment
- Personal information
This includes verification of citizenry, your social security number, and contact information
- Banking details
Your lender will need details of your checking account to enable them to deposit your loan if approved.
How to spot lousy credit loan scams
- Lofty guarantees Genuine direct lenders will promise you a loan without taking into account your personal information and income status. Any lender who guarantees a loan without this information is probably about to scam you.
- Upfront ‘loan processing’ fees
Genuine lenders do not ask for any mount before your information is submitted to them. It is indeed against the law to charge fees for an application.
- Scare tactics Unsecured personal loans lenders should not pressure anyone into a getting a loan before you are sufficiently at ease with their firm. Take your time to evaluate all options before settling for the right one.
- Lots of unsolicited contacts If you receive lots of spam mail text and calls, you have most probably had had your personal or financial information farmed to scammers. Avoid any further contact from such.
- Pushy requests for information If your lender makes contact over the phone and asks for your details, you should take caution. The unsecured personal loans online process is sufficient to supply all the details a lender needs to process your loan.
Bad credit ratings may place in a very vulnerable position when looking for emergency funding. Personal loans for people with bad credit lenders will lend you helping hand though ensuring that you can make ends meet your poor credit score notwithstanding.
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.