A credit score is one of the major determining factors for a loan to be approved and for people with bad credits it will be a real challenge.
Banks and lenders use credit standing to determine how likely a borrower can pay back a loan. People with poor credit history will be perceived to have issues that lenders may simply reject any loan request from them.
Can People with Bad Credit Get a Loan?
The straightforward answer is YES, you can get funds even with poor credit! In fact, there are various types of loans suitable for people with bad credit. There are lenders that offer different financing schemes and the best thing that a borrower with bad credit should do is to search for a lender that offers favorable terms which could help improve your credit score.
Loans for borrowers with bad credit:
Personal loans
Personal loans can either be secured or unsecured. A personal loan is commonly issued by banks, online lenders and credit unions on an installment basis. Although personal loans may incur higher interest rates, this type of loan is applicable for people with bad credit.
Compared to other loans, personal loans can offer bigger amounts with much longer repayment periods. Borrowers can also have options for personal loan repayment of up to 12 to 24 months (about 2 years).
Payday Loans
Borrowers who need quick cash funding can consider payday loans. People with bad credit can apply for this if they are employed and able to present proof of employment. A payday loan is a short-term loan type that often can provide an amount of $500 or less. The due date for this will typically be on the next payday. With higher rates of interest, the Consumer Financial Protection Bureau regulated payday loans and are currently banned in certain states but available for some states with certain limitations of the loan size and fees.
Credit Card Cash Advance
Cash advances are granted by the credit card issuing banks. The amount of cash advance limit is set by the issuing bank and can be availed by borrowers who are credit card holders too.
In today’s very challenging and uncertain condition of our life, lenders allowing people with bad credit to get a loan is a big help. Well, they deserve second chances, too – to make their finances better. With the many options given to people with low credit scores, all they must do is to understand which loan fits their current financial situation to avoid being in default. These loans are an opportunity for them to prove that they can make up for their financial mistakes in the past.
If they can prove to be a responsible borrower, they might be given the chance to avail themselves of loans with bigger amounts and/or loans with lower interest rates. So, for people who are in dire need for funds, don’t get easily frustrated because there are lenders who are ready to help you and give you chances to be a better borrower, just make sure whatever amount you will borrow, will go to the most important things, will be used for needs and not wants, for the betterment of your current financial situation.