A considerable percentage of Americans have a bad credit rating, and the bad credit loan services is a huge relief for them. Bad credit loans provide relief to those who have bad credit scores, allowing them to borrow a certain amount of money. It is used mostly by people who need to pay something urgently, like emergency expenses inside the hospital, utilities, and so much more.
Bad credit loans are categorized as a personal loan, and many people stated that it has helped them get out of a financial emergency in the past. Credit scores are an important statistic for banks in the United States and refer to it if someone tries to get a loan from them. They mostly reject those who have bad credit, because of the fear that an individual would not pay them back. However, with bad credit loans, people who have credit scores below 650 could borrow money without any hassle.
Is There Hope If I Have Low Credit?
There are many firms who provide bad credit loans, and you can compare companies that offer small personal loans to see which one would work for you. A lot of facts about small loans companies are reaching the ordinary American citizen, making it plausible for them to reconsider their options with these firms. Many bad credit loan companies now have a growing client base, because of the need for many people to get an emergency fund.
What Can Small Loans Be Used For?
Most of the time, the money borrowed from a bad credit loan firm goes into vehicle repairs or medical bills. Americans tend to spend a huge percentage of their money to have their vehicles repaired, considering that the amount posted by their local dealerships is higher and more expensive compared to other countries.
Relief For Those With Medical Expenses
Their medical services, including those inside the hospitals, are also costly, and sometimes, their medical insurance is not enough to cover all of the expenses. Bad credit loan firms are their answer for an emergency fund, and these small companies have already demonstrated how they can provide relief to those who are going under extreme financial problems. People who are trying to get loans from big banks during these times of emergencies ended up stressing themselves if they got rejected, but with the rise of the small loan firms, they now have another option to take that would allow them to get the loans that they needed. Another set of facts about small loans companies is that people who have terrible credit scores have a higher chance of being given a loan, provided that the documents requested by the loan firm will be granted.
When Applying For A Small Loan
When someone asks for a bad credit loan, they will be required to submit papers and other documentation that would support their identity and their ability to pay back. A lot of people who wanted to take a loan would compare companies that offer small personal loans, and then choose which one would work out on being a possible partner. Because bad credit loans are also treated just like a regular personal loan, the creditor is expected to pay the money that they borrowed on a specific span of time, through monthly installments or any other form of payment agreed upon between the two parties.
Bad credit loan firms would sometimes partner with banks to get the loan for an individual, but if it does not work out, they also provide a huge number of options for the creditor. These options have affordable interest rates, and the qualifying requirements are flexible, giving the creditor the freedom to choose the option that they wanted.
Know Your Credit Score
There are many personal loan options for bad credit available online. Before you start applying, check your credit score to help you figure out what you’re eligible for. There are many places to do this for free online. CreditKarma, Credit.com, and Discover Credit Scorecard are three reputable options. Set up an account and you can see your score updated weekly or monthly. Look at the score to see if there’s anything unexpected and contact the credit bureaus about errors on your scorecard to have them removed.
Prepare Your Documents
There are a few pieces of information that you may be asked for in an online loans center. Each application is a little different, but having all your info together will make it easier for you to apply.
Get prepared with the following items:
- Most recent 3-6 months of bank statements
- Most recent 2 pay stubs (or other proof of income if you’re not paid regularly)
- 2-3 personal references
- Most recent employer information
- Mortgage or leasing information for your home or apartment (monthly payment, how long you’ve lived there, name and contact info for the landlord)
- List of assets you own and have paid off, such as a car or property
Find the Best Personal Loan for You
Big banks like Wells Fargo will rarely provide a personal loan to someone with a bad credit score or limited credit history. Luckily, with the boom of online lenders, you don’t have to rely on a Wells Fargo for the best personal loans terms. Online lenders often look at factors like your employment history and income in addition to credit score to determine your eligibility. Because of that, they’re more willing to lend to applicants with less-than-perfect credit. An added benefit of online lenders is that the application and funding process is usually much faster than a traditional bank – about 2-7 days in most cases – and directly deposited into your checking account. Below are six of the best personal loans online that work with applicants who have bad credit:
- ApoLoan – is a broker that offers short-term loans up to $1,000, Minimum Credit Score: Varies. Application Time: Online application, funds as soon as next business day.
- Earnest – is a direct lender that offers 1-3 year loans between $2,000 to $50,000. Minimum Credit Score: 640. Application Time: Apply online, funding in about 7 days.
- LightStream – is a direct lender* that offers 2-7 year loans between $5,000 to $100,000. Minimum Credit Score: 660. Application Time: Apply online, funds as soon as the next day.
- LoanSolo – is a broker that offers short-term loans up to $1,000. Minimum Credit Score: Varies. Application Time: Apply online, funds in 24 hours.
- Prosper – is a direct lender that offers 3-5 year loans between $2,000 to $35,000. Minimum Credit Score: 640. Application Time: Apply online funding time varies.
- SoFi – is a direct lender that offers 3-7 year loans between $5,000 – $100,000. Minimum Credit Score: 660. Application Time: Apply for online funding in about 7 days.
Using Credit Unions
Credit unions are a great option to get a bad credit loan, and usually, the maximum interest rate for each union falls under 18%. The next great option to get a bad credit loan would be through family or friends, which provides smaller interest rates. However, if they knew about your bad credit score and if you have a habit of not paying on time, there is a higher chance of getting rejected. A co-signer would also work out, wherein a creditor who has a bad credit score would look for someone who has a high credit score, and they will be working together to get a loan that has a lower interest rate.
Using Home Equities
Home equities could also assist someone who wanted to get a loan because they would look into equity as a requirement to provide a loan to an individual. A credit score is usually not a factor for home equities. Online and P2P can also provide bad credit loans, and there is a huge market for those who wanted to avail of their services. The terms and conditions are also flexible, depending on the lender. Many additional options can be considered by those who wanted to get a bad credit loan, like payroll advances, retirement account loans, and life insurance loans. However, the last three options should only be considered when everything else fails.
The Likelihood Of Being Approved
American financial institutions are wary about the practices took by creditors who have a bad credit score. The credit score matters in American society because it measures the likelihood of an individual to pay for the money that they borrowed. The worse your credit score is, the higher the likelihood of any future loans you applied for to be rejected. Credit scores span from a value of 300, being the worst, to 850, being the best. Bad credit scores begin at 650, and financial institutions tag people who are falling under this category as high risk. Depending on the institution, people who have a credit score of 650 and below have a higher chance of getting rejected, while those who have a credit score from 760 to 850 are considered as excellent, and they could get the loans that they needed without any hassle.
Having Bad A Credit Score
Bad credit scores would also take a toll on someone’s interest rates when they are given a loan. For those who are in the good to the excellent bracket, they could get the best loan terms, with the lowest interest rates. However, those who have a poor credit rating could get higher rates, if they are lucky enough not to be rejected in the first place. In the United States, the average credit rating for the population falls to 700, which increased by 11 points compared to previous years. The older popular has a higher credit rating, while the younger ones have the worst scores.
Hope For Those With Bad Credit Scores
Bad credit scores can be improved, and one should start by not accepting any other credit cards, since it becomes the sole culprit why debts add up, especially to those who do not have any control with their debts. Improving the credit score would also open up new opportunities for an individual, and making on-time payments would make it better. However, it is not realistic that your credit rating would improve between three to six months, because you should wait for at least a year before you can see any improvements with your credit rating. This is where the bad credit loans step in because they knew that people would always need something to hold onto if they needed to borrow money.
Most Americans are aware of the facts about small loans companies, knowing that they would also do everything to persuade someone to borrow from them because it is still a business after all. Credits would also compare companies that offer small personal loans, and choose those that have better rates. If you wanted to start getting loans from a bad credit loan firm, you would need to prepare for the documents that they will require to give you a better chance of being approved.