People with a Bad Credit History:
Over the last few years, the consumer market has seen a flood of personal loans for people with a bad credit history. Both creditors and lenders have shown that they are both still willing to try and help out those who do not have the best credit history by extending them personal loan opportunities. However, this does not come without an additional price to pay.
Just because a person has a few spots on their credit history or does not have a particularly stable stream of income does not automatically mean that they cannot get some kind of personal or credit loan, even with the state of the economy in the last few years. For those who do not know what qualifies as a bad credit score, having a FICO score that is either 580 or below is, without a shadow of a doubt, a bad credit score. Those who have a FICO score between 580 and 619, this is still generally considered a low score.
Having said that, the conditions under which people with a bad credit history can request and successfully receive a bad credit personal loan will vary greatly from person to person. For example, if a person has a horrible credit rating, or if a person has previously experienced malfeasance toward a creditor in recent years — for example, having filed for bankruptcy — then that person will generally find that their options as far as getting a personal loan are indeed very limited. It may be possible that a person in this situation could quality for a restricted or a high interest credit card instead of a personal loan, so it certainly pays for someone to shop around.
However, it is important to keep in mind that there is always a record whenever a lender pulls a person’s credit report. While this does not sound particularly important, it can actually have a negative impact on a person’s credit when multiple credit checks occur. Because of this, it is very wise to discuss this with someone who is a potential lender before they have a chance to go ahead and pull their own copy of a person’s credit report. If it does not lead to anything, at least the situation will not become any worse by having someone unnecessarily pull the credit report.
There are very high interest rates that come along with unsecured personal loans, which are another option for those who sport a poor credit history. Unfortunately, many of the people who find themselves with this kind of loan often wind up in a snowball sort of situation where the debt then begets debt. This leads to the very high interest rates as well as additional fees sometimes getting to be even higher than the minimum monthly payment that is required. This situation will quickly result in a person winding up maxing out the credit limit, and this only makes the situation worse; now the person will begin to receive additional monthly charges for having spent over the limit.
Getting a bad credit personal loan can definitely be a powerful tool for a person who needs some quick cash in an instant, which allows them to pay off another debt that has an even higher interest rate, or even to pay off something else that came up unexpectedly. However, these sorts of loans can also put a person at even higher risk for mismanagement and default. In fact, many experts versed in personal loans often recommend that a person try to clear up their credit history before they try to submit themselves to a more high-cost debt.
It is not impossible to wisely manage a personal loan when a person has bad credit, or even a credit card along with bad credit, and the key is to crunch the numbers — figure out how long it will take to fully repay the debt. Often, a borrower with a bad credit history will look at the bottom line, which is how much they can afford on any given month, and then they opt to borrow the maximum amount while only intending to make the minimum payment. Those with a bad credit history can get a personal loan by getting the smallest amount possible for their situation and making more than the minimum payment required. This repairs their credit history and then helps them get better loans in the future.
Another logical step to take is to consider why a person’s credit history is so poor. This is because often it can be due to an innocuous reason, such as a bank accidentally misreporting a certain finance charge. This means it is wise to go through and fully examine the credit report and fix whatever is possible — this is the next primary step to opening up new avenues for getting personal loans. After all, the credit reporting agencies are by no means perfect, so carefully reviewing the report can lead to discovering something that has an easy possible fix.
Taking on the other issues that are evident in a credit report can take both plenty of patience and plenty of time, but there is really no other quick way of improving a bad credit history. In other words, while it is possible to get loans with a bad credit history, the best way to get them is to take the necessary steps to fix a bad credit history before attempting further.
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