You are here
Home > Finance > Can I Get A Loan With A Bad Credit Rating?

Can I Get A Loan With A Bad Credit Rating?

Getting a bad credit rating is a lot easier than many people think! To make it worse you might not even know you’ve got one till you’re far into the loan application process and not people know what actually affects their credit rating. For example, if you’ve taken out loans before, are these loans affecting your credit rating?

The answer is more than likely yes! And things like making late payments can easily drive your credit rating down while other financial matters like being declared bankrupt can have a huge effect. That all makes sense doesn’t it? But what you might not know is that even things like only making the minimum payment amount can also affect your credit score for the worse!

That might seem unfair, but some lenders can see it as you struggling to pay off your loans/ debts quickly. To make this, even more, complicated is that even things like not having a history of loans repayments could also be an issue.

The majority of loan providers will want to check your credit history before granting you a loan, but if it’s your first loan that you’re applying for then you’ll have no actual history to check will you? So, you have no evidence to prove you can make timely repayments. Yes, it’s all a bit of a conundrum, isn’t it?

But it all adds up to the fact that getting a bad credit rating/ score is a lot easier than you might think and improving it is not something you’ll really be able to do quickly. For the majority of people improving their credit score is going to be a slow process and not something you’ll be able to do in a few weeks.

But there is some good news because even with a bad credit rating you can still get a loan, although your options will be more limited. That doesn’t mean you can’t still get a good deal, but it will mean you’ll have to search a lot harder for it. So, let’s take a look at what loan options you have if you have a bad credit rating.

Payday Loans

These are probably the go-to loans for many people with a bad credit rating, which is unfortunate because they have a lot of negatives to them. However, it can’t be argued that they are true to their word when they say they will take the majority of clients regardless of their credit score.

Payday loans are short-term loans with a maximum time-frame of around 30 days (in most cases) and the amount you can borrow is limited. However, they come with very high interest rates which means paying back the loan back is usually going to be very expensive.

Payday loans are so popular that many lenders specialise solely in them and they are available online as well. They are quick and easy to get but the eventual cost is usually going to be very high, so make sure you take that into account.

Title Loans 

Title loans work in a similar way to payday loans although they are often going to be the better option between the two. Like a payday loan, a title loan offers a quick application process and they will take customers with bad credit ratings. However, there are some important differences and certain criteria you’ll need to meet.

Title loans are all tied into your car (or another vehicle) which means if you don’t fully own a vehicle, which means you hold the title to it, then you won’t be able to apply for one. The amount you will be granted will all be based on your vehicle as well. The age, model, and condition of your vehicle, as well as your driving history, will be taken into account when it comes to deciding on how much you can borrow.

Your vehicle will also be the collateral for the loan which means if you can’t pay the loan back in time it will be repossessed. Since the vehicle is acting as collateral your credit rating won’t be taken into account which makes title loans a very good option for people will a poor credit rating.

Like with any other type of loan you should check out any providers carefully before applying for a title loan. https://toploancompanies.com/apply-for-a-car-title-loan-online/ is a great place to check as it will give you detailed information on title loan providers.

Bad Credit Loans

With a name like that you can probably guess what these loans were designed for, can’t you? Bad credit loans are built for people with a bad credit rating who wouldn’t be able to apply for a standard loan. Many loan companies will offer them, and they are not bound by the short-term time-frame of the other options we’ve looked at and you could get a bad credit loan for a much higher amount of money.

So, if a short-term loan is unsuitable for you then a bad credit loan is a good alternative, or it might seem like it is! Bad credit loans will come with very high interest rates because to the provider you will be a very high-risk customer.

They are also available in both secured and unsecured forms although many providers will push for a secured loan. Which means you’ll have to use something of high-value like your house or other property as collateral.

Bad credit loans can sometimes be your only option if you have a poor credit rating and need more money than a short-term loan can offer, but they are very high-risk ventures. So, don’t apply for a bad credit loan right away it’s usually suggested that you use them as a last resort when all other avenues have been explored.

So, that’s three very different alternative loans for people with a poor credit rating like always I recommend paying the loan back as quickly as possible to avoid high-interest rates whenever possible. You might have fewer options, but you can still find a loan so don’t think a poor credit rating/ score means nothing is available.

Leave a Reply

Top
%d bloggers like this: