Getting a loan provider with bad credit is one of the most difficult things for many people with poor credit. For someone with a poor credit score, it can be difficult to get a loan. Even when one gets it, getting a reasonable or affordable interest rate is tough. However, you can still find lenders who offer loans to those with a bad credit score though you need to research which ones.
Bad credit loans tend to have a higher interest rate than standard personal loans. The lenders have to take a risk without knowing whether you are really capable of paying back. In most cases they are providing funds to people who are more likely to default. Credit scores are just one of the ways lenders can check your finances before giving you a loan. Some also consider your income, debts and collateral.
What does it mean to have a bad credit?
A bad credit stems from the accumulation of bad money usage and management. It’s normally from a bad history in how you were paying back money that you owed people or a company you’d entered into a contractual agreement with. The score is calculated electronically based on your past financial activities.
Lenders will run a report on your credit history to check whether there are instances where you missed payments in the past. The more payments you miss, the worse your credit history looks. This does not leave out those with a short credit history. If you don’t have an extensive credit history, you’ll still have a bad credit score because the lender has no information about you.
If you don’t have an extensive credit score or have a bad score but still need a loan, there are lenders still willing to consider your application. Get in touch with them so that they can confirm if you are eligible. You might be accepted or not so it’s still worth looking into. Below are tips to finding a good online loan provider with a bad credit.
Determine the type of loan you want
There are different types of loans available and before you select a loan provider, you first need to know the type of loan you want. You can either choose a personal, secured or guarantor loan. For a personal loan, you don’t really need to put down security though you might need to pay more interest. But, this does not mean that you may be able to borrow as much.
A secured loan is just that “secured”. You need to secure the loan using a valuable asset or property that you own. Pick an item that is of value to you and let it act as security. This might be a home or car. The home, car or item that you pick will cover you in case you default on your repayments. In a guarantor loan, someone has to be able to cover for the costs if you cannot make repayments. You can either choose a close friend or family member to make the payments if you cannot do it in person. This is a great article that expounds more about the best credit loans.
Check out the different loans available and their payment terms to decide if they are a good fit. Visit sites like MoneySuperMarket, which enables consumers to compare prices of different products which include home insurance, energy, car insurance, travel insurance, mortgages, credit cards and loans.
The website has an algorithm that allows the comparison of different loans from a panel of lenders that shows you the most suitable deals. You’ll also have some questions that can help you narrow down to a lender with great deals on how much you can borrow and the best rates and terms.
Apply for a deal
Once you’ve narrowed it down to the lender of your choice, apply to the loan provider. They’ll go through your application and then make a final decision. The application can either be accepted or rejected and you should be able to accept your loan application based on the agreed terms.
Once you’ve figured out what you need, send your application and if it has been accepted, you’ll receive your money a few days later. Afterward, you’ll just be paying back in monthly installments which is doable. Even if your credit score went well, you still need to keep monitoring it. Keep an eye on your credit score and ensure that it’s always as high as possible.