April 21, 2012

Just because you have bad finances, that doesn’t mean that you don’t need to get a loan. Whether you have to get a new car, fix plumbing that suddenly exploded or cover special events like a wedding or a funeral, you probably won’t have the money in your pocket to take care of that issue right then and there. But if you have a bad credit history, chances are very good that you’ll be rejected by lenders. Unless, that is, you find someone that specializes in bad credit loans.

Bad credit loans have a couple different names in the lending world. You can call them no credit history loans, or sub prime loans, but they are all meant for people that have a poor credit history. Whatever the name of the specific loan these programs take a wider view of a potential lender, and the lender bases the decision upon more than just the person’s credit score and credit rating number. This can be an advantage for those that have had bad credit in the past, but whose situation has improved to the point where making regular payments reliably is a much more likely reality.

Another option for those that have bad credit is to get a co-signer. While not a bad credit loan per se, if you have someone with good credit such as a parent, sibling or other close person in your life that will vouch for you they can co-sign on your loan. Unfortunately this means that if you fail in your obligations to pay back the loan then the obligation falls onto your co-signer, and credit hits affect you as well as that person. So this option may be difficult if you have bad credit because you must find someone willing to stick their neck out for you to a lending institution. It should be repeated that this isn’t a bad credit loan, but rather a way for someone who has bad credit to get a normal loan when that would not otherwise be an option.

For those that have bad credit who only need a small amount of money, say a few hundred dollars, there are payday loan companies that are willing to accept clients with bad or no credit history. These loans don’t require any background check or credit history score, but they will require that the applicant be currently employed and that copies of recent pay stubs be attached. How much you make will determine how much money these companies will loan you, and the more money you make the bigger the loan you can get will be.

If you choose to use these payday loan companies for your bad credit loan needs though, you need to be aware of both the good as well as the bad. While these loans may not require a credit check, and they don’t require an collateral on the part of the client, they do have a very, very high rate of interest. That’s because these are short term loans that are supposed to be paid back by your next payday. So if you don’t believe you can pay back the entire loan next payday, you may want to seriously reconsider using this type of loan to help you with your immediate financial troubles.

Regardless of which bad credit loan option you decide to pursue, it’s important that you remember you should always examine the entire field before you sign on the dotted line. Just as with any other sort of loan you have to be sure that you are getting the best possible rates available for your situation and that there isn’t a better loan option right around the corner at another bank or lending institution. After all, just because you have a bad credit history, that’s no reason to let yourself pay more money to the first lender willing to take a chance on you as a client.

Additionally you have to remember that bad credit is not a permanent state of affairs; you can improve it. In fact you can improve your credit by getting bad credit loans and making regular payments until you’ve paid back the loan in full. The more debts you have that get paid, and the more reliable you are as a loan customer, the higher your credit rating will climb. In fact if you climb high enough you’ll open up new doors so that when you need loans in the future you’ll have more options available to you than bad and no credit lenders willing to take a chance.