The term bad credit loan refers to a type of loan which is designed for individuals who find it difficult to obtain a loan through the normal channels. This is usually because they have a less than good credit history. This type of loan is invariably more expensive than other types of loan and is not something to be entered into lightly or without a lot of thought and consideration. It is usually not too difficult to find a bad credit loan if you happen to be a property owner with more value in your house than any debts secured on the property. For tenants and non property owners it is not quite as easy as the lenders are always looking for some sort of security against any money they lend to somebody with a poor credit history. You can't really blame them can you?
For these individuals with no security to offer there is the unsecured loan which does not require them to offer anything as security. These are freely available albeit with a higher rate of interest. When it comes to an unsecured bad credit loan it's a different matter. These can be pretty hard to get hold of and invariably will come with an exorbitant rate of interest.
The interest rate on bad credit loans is in the form of an APR (Annual Percentage Rate). You should check out several lending companies, ask about their rates of interest and loan terms, and check out their loan process. It is understandable that lenders charge this high rate of interest as it is quite a high risk strategy to lend money to somebody who has in the past apparently failed to make payments on some sort of credit agreement, be it a mortgage, a loan, credit card etc. The interest rate on bad credit loans normally depends on the amount of time between credit problems and the loan application.
To sum up, bad credit loans are very popular these days, which shows there must be a lot of people with bad credit histories. These loans can be the only real answer to a poor credit situation that the individual may find themselves in. Bad credit loans can also be very useful for any individual in any short-term financial situation. These loans are available from many companies and you will receive expert financial guidance to help you improve your personal credit history and get back on the road to financial freedom.
I Need A Bad Credit Loan
A bad credit loan is a type of loan that is offered to individuals that have poor credit.
How do you know if you have bad credit?
First, before you apply for a loan, you should write the credit bureau to get a copy of your credit report.
How can you tell if you have bad credit?
If you are receiving calls from a collection agency, you have bad credit.
You have bad credit if you have three or more late payments on your credit report.
But there is more!
You also have bad credit if you have any of the following on your credit report:
Unpaid closed accounts. This could be credit cards, auto loans, home loans, apartment lease, cellular phone, cable bills and much more.
Any account that is closed and was not paid off will show a charge off on your credit report.
This is one of the worst items that you can have on your credit report. It tells the person that checks your credit that you will never pay off the bill.
You can also get bad credit by co-signing for another person.
For example, you could co-sign for a person to get a new car, loan or apartment. If the person you co-signed with is ever late of a payment, that would cause you to have bad credit.
How To Clean Up A Bad Credit Report
If you would like to clean up or repair your credit, your first step is to order your credit report.
Once you have received your report, you should either pay off any unpaid bills on your report or contact the account holders to make some type of payment arrangement.
It is always better to pay the bill off if possible. If you owe a large amount of money, you may want to contact a debt consolidation service.
For a small fee, they would contact each account holder to work out a payment plan that you could afford.
They would combine all of your bills into one monthly payment. This service would improve your credit history over time.
If all of your accounts are paid off and still show a history of late payments, you could hire a credit restoration service. Credit restoration or credit repair companies can contact the credit bureau to try to get them to remove the late payments from your credit report.
These types of services can only help you to clean up your credit history if you have already paid off your accounts. The reason why your account must be paid off for a credit repair company can be able to help you, is because the credit repair service will send a letter to the credit bureau requesting to have all the negative items removed from your credit report.
The credit bureau will send all your account holders a letter stating that you would like to remove the negative information that they sent to the credit bureau about your account. If your account holder does not respond to the credit bureau's letter, the credit bureau would have to remove the information from your credit report. There is a much better chance that the account holder will not respond to the credit bureau if your accounts are closed and paid off. If your accounts are not paid off, the account holder knows if they respond to the credit bureau, the negative items will stay on your credit report.
The bottom line is, you need to pay off all of your accounts before you try to use a credit repair service.
The credit repair company can not help you if you have open or closed accounts that are not paid off.
How to rebuild your credit?
Besides cleaning up or repairing your credit report, you must also add good credit to your report before you would be seen as having good credit.
Below are a number of things you can do to build up your credit.
Get a auto loan. If you are employed, you can get approved for an auto loan, even if you have poor credit. This method will only help your credit, if you make all of your auto payments on time.
Apply for a major credit card. With poor credit, you will need to apply for a major credit card that offers a low line of credit for individuals that have bad credit. Again, this method will only help to rebuild credit if you make all of your payments on time.
What About Personal Loans With Bad Credit?
There are a few companies that offers personal loans for people with bad credit. You will need to look for companies, not banks that offers high risk personal loan programs.
Banks never offer bad credit loan programs. You will need to look for credit unions or small lenders. There interest rates are much higher than a bank because of the higher risk that they are willing to take.
Payday Loans
If you need fast cash and have a checking account, you could get a payday loan for up to $1,500 with no credit checks. They are not concerned about your credit history because they would start collecting there payments in about 2 weeks from the time that you have received your loan. Your payment is collected directly from your checking or savings account.
Both James Hunaban & Bestyet77 are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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