There are times when you need to get through financial emergencies and apply for loan but with bad credit and it is always not fault. A bad credit score (300 to 629 according to FICO scale) does not hinder you to apply for loan to cover your needs to pay medical bills or to get vocational training to improve your life.
Bad credit score may be low credit or short credit history. Late or missed repayments or maxed-out cards leads to financial blunders and lower your credit score.
In fact, there are some online lenders specialized in bad credit loan. The interest rates may vary from lender to lender but generally they charge high interest rate. These online lenders give consideration to the credit score and credit history before deciding whether to qualify you for loan.
Check your credit report from credit reporting agencies online for free, before applying for loan. If there are any mistakes which may be negatively harming your credit. If you find anything wrong, report it to get the correction. Do your search and compare online lenders and options to find which loan suits your financial situation.
Be ready for a credit pull, while some lenders do hard pull which will impact badly on your score but some do soft credit check only. Knowing your credit score will help you what rate to expect from your lender.
Gather your personal information required by lender which is your social security number, ID, income documentation. Be ready so that process is quicker to approve.
When approved for bad credit loan, read carefully your loan contract before signing it. Make sure to understand all terms and fees including interest rate, repayment term, late penalties and more.
Online personal loan is a common, all-purpose loan can be used for any necessity but it should be used responsibly. Here are some types of online loans for bad credit.
Short-term cash advance loans
Short-term cash advance loans are usually repaid in single lump sum and based on term of one to seven days. These are best for emergency situations which need quick finances. These cash advance loans are limited in size and can be easily paid with next paycheck.
Many online lenders are trusted for quick funding, just in 24 hours.
There is another loan with large amount with high interest rate fails to repay loan and this cycle makes the debt a huge burden for borrowers. This makes the situation get worse for borrowers.
Long-term installment loans
Their term range from six months to three years has to be repaid in monthly installments. Long-term installment loans are best for financing big projects or necessities that can paid for longer time period. Consumers can compare and select their interest rates and installments.
You can get secured loan if you collateral to pledge, like a home or car. This comes with interest rates and terms of your choice and can apply for higher amounts. But if you default on loan, the lender is able to get hold of your home or car or other expensive jewelry.
This does not require any collateral based on your creditworthiness. This usually comes with high interest rates and lower loan amounts.