Nobody wants to be in debt, but if you find yourself in a bind you will need a solution to your financial problems Bad credit loans are readily available to folks nowadays. Yet, many people still believe that if you have poor or bad credit, you will not qualify for loans. This is simply not true. Bad credit loans are a huge secondary market operating alongside the traditional banking sector, and are typically offered by non-bank lenders. Depending on your credit score, the estimated APR (annual percentage rate) of your loan will vary.
It is possible to qualify for a loan between $250 and $5,000, even if you have a shoddy credit score. The loan terms range from 1 year through 3 years, and your monthly repayments will vary according to the estimated APRs. If a lender deems you to be a risky borrower, the lender may increase the estimated APR to safeguard the line of credit.
Getting Out of Debt is a Process that Begins with Building up Credibility
Bad credit, like all credit, is represented by a 3-digit number. Traditional FICO (Fair Isaac
Corporation) scoring systems are used by some 90% of lenders in the world. The FICO score determines whether you get approved for a loan or not, the interest rate, and the terms of your loan. The FICO credit score continuum ranges from 300 on the low end to 850 on the high-end.
As you move towards either end, your prospects for loans change dramatically. For example, a person with an extremely low credit score (poor or bad credit) is typically slapped with more denials, higher interest rates, and less favorable terms and conditions for lines of credit. If your credit score is 750+, you get better interest rates, more flexibility, and access to the best lines of credit.
Credit scores are simply numbers that provide a snapshot of a customer’s credit worthiness. It considers your payment history over time, your credit utilization, the number of new accounts you have opened recently, the age of your oldest account, etc. Fortunately, credit bureaus and reporting agencies provide reasons for your credit score. Be advised that these reasons typically highlight negative factors such as too many new accounts being opened, too many account queries, too much credit utilization, untimely payments etc.
There are 3 major credit bureaus in the US, including Experian, Equifax, and TransUnion. As a customer, you are entitled to 1 free credit report from each of these credit bureaus every year. While your scores may vary from one credit bureau to the next, they are typically within a tight range. As you show yourself to be fiscally responsible, your credit score will improve over time.
If You Need a Loan, Be Sure that You’re Applying for the Best Terms
Applying for personal loans is always easy, regardless of your credit score. For starters, the
process is 100% free, secure and fast. Getting approved for a personal loan is a different story entirely. Depending on your credit score, you could apply for a personal loan between $250 and $5,000 by visiting individual loan providers or using a credit loan aggregator platform. Applications for personal loans are really easy to make. You simply enter the state you live in, the amount of money would like to borrow, a few biographic details (name, last name, email, zip etc., and continue through the application process.
If your credit score is low, you will still receive offers from various loan providers, but they may be a little less favorable. The interest rates (APRs) move higher as your credit score decreases, and move lower when your credit score is high. Nonetheless, there are other factors that are not reflected on your credit score, notably your income and the length of employment.
Certain lenders will view credit scores differently. For example, one lender may have a minimum approval score of 700+, while another will accept people with credit scores of 650+. Fortunately, credit aggregator platforms allow you to pick and choose from a list of lenders, even if you have bad credit. Not all debt is bad; some debt like college tuition and mortgages are good debt. Evaluate your needs first and ensure that you understand what type of debt dilemma you’re facing. You may find that qualifying for a loan actually helps you over the long-term!