It has happened to all of us, both good and bad credit holders. We have an unexpected expense. The car throws a rod, the refrigerator is turning into a mold factory, an expensive new prescription is needed to treat an unforeseen medical problem. Maybe a bill you have set aside has suddenly come due - in full! These unfortunate demands and other situations rise up in lives daily and sometimes the only way to get rid of them is to throw money at them. You could find that cash by drawing a personal loan for those with bad credit.
Credit Histories and Income Are Scrutinized
You need to pull your credit reports. You need to examine each
thoroughly. Typically there are errors. You should get those taken off
your reports, but remember this can take 1-3 months. So prepare before
you go shopping for your personal loan for those with bad credit.
However, understand that your scores will not be the deciding factor all
the time. More important to these lenders is your debt to income ratio.
Lenders will want to know about your current obligations and your
income. They want to be sure that you have enough money left over to
meet another debt.
Two Types of Personal Loans for Those With Bad Credit
When you apply for your personal loan for those with bad credit, you
will see that most lenders offer two options - secured and unsecured.
Secured loans are those wherein the borrower offers collateral, or
valuable property, to secure the loan. If you default on the loan, the
lender can seize the property and use the proceeds to cover the cost of
the loan. Because of this security, interest rates are often much lower.
For secured personal loans, the collateral can be a house or other real
estate, stocks and bonds, or even a late model car. Ask the prospective
lenders which type of property they will accept. Unsecured loans have
nothing to back them except your spoken promise and your signature on
the dotted line. To compensate for the increased risk, the lender is
obliged to ask for higher interest rates for your personal loan for
those with bad credit.
Never take the first offer. One good offer means there are probably two
more out there even better. Personal loans from traditional lenders (for
those who can get them there) as well as from private lenders carry the
legally highest interest rates than for any other type of loan, whether
the borrower has good or bad credit. Of course, the better your credit
scores, the lower your interest rates. Do not fall victim to predatory
If someone says they are doing you favor because of your credit scores,
walk away immediately, they are out to get you with high interest rates
and exorbitant fees. Once you have selected four or five lenders whose
terms and conditions you like, research each company thoroughly. Try the
Better Business Bureau online listings. Always read all the fine print.
No question is a silly question. Understand the terms and conditions of
your personal loan for those with bad credit thoroughly.
Credit Repair Possibilities
Another good thing about personal loans for those with bad credit is
that they offer an opportunity to put some shine on your credit history.
You should make sure you make every payment on time and in the amount
prescribed in your contract. If you keep doing this, even with small
loans, your credit ratings will increase immediately and even