It is after you have damaged credit that you realize how easy you can get a cheap loan previously. Now, banks do not want anything to do with you and the only lenders willing to give you a loan will charge very high interest fees. This is because the entire lending industry now uses your FICO credit score to determine your personal credit worthiness. If you have bad credit under 500 FICO, perhaps only loans sharks and other high risk loan companies are willing to work with you. The only good thing is that there are many such lenders for people with bad credit on the internet, which means you cans till borrow money easily if you really want to.
These no credit check loan lenders realize early on that they can make a lot of money by giving loans to people who cannot borrow money from banks because of bad credit. This is a pretty big market segment, which is why more and more companies are providing loans for all types of credit score. Not all are shady loan sharks, some are even listed on the Better Business Bureau (BBB) website with positive testimonials from borrowers.
You always have to pay more interest rates on unsecured loans with bad credit. To avoid this, you can either increase your credit score or use some collateral to secure the loan. Secured personal loans are always easy to get approved even with the worst credit scores under 500. You can even borrow $100,000 with bad credit, as long as the market value of your collateral is more than that. This can be your home or other assets of significant value. Even banks will be happy to discuss a loan for you, usually in the form of a home equity loan for bad credit.
All lenders love issuing secured loans since they pose very little risk. Even if the borrower default or abscond with the money, they can seize the collateral, and sell it off to recoup their money. Most small business loans for bad credit are secured in nature, due to the large amount involved, while most personal loans are unsecured and for short loan periods no more than 12 months.
Short term unsecured loans are usually available only from online lenders and the maximum you can borrow in 1 hour is $1500. Anything more will require extra paperwork to verify your income or credit history. Unsecured loans are very risky for lenders especially in no recourse states since borrowers can walk away from payments without losing any assets or collateral. Banks will only provide unsecured cash advance loans if you have good credit and your account is in good standing. For everyone else, you simply pay higher interest rates to compensate the online lenders for the increased default risks. Just a side note, a student loan is possible the largest unsecured personal loan you can get with bad credit.
As mentioned, most online loan companies are willing to lend money unsecured to people with poor credit. Applying is quite a simple and hassle free, with no need to fax any documents for a $1500 loan. While you probably know about comparing loan quotes from different lenders for bad credit to ensure the best deals, not many borrowers are aware that some reputable lenders are BBB approved and some lenders are blacklisted for unethical hidden fees. You are highly recommended to choose a legit BBB accredited loan company for bad credit loans to ensure fair fees.
If you have a stable job, payday loans or cash advance are good when you do not want a credit check. You can limit the costs on such loans because the borrowing period is usually under 2 weeks or 14 days. Try to avoid extending payments on such loans.
Always be prepared that you may lose your job or income and lenders may not want to give you a loan for the unemployed. The best way is to save at least 10% of your monthly paycheck for such situations. Stuck with bad credit for years will do a lot of damage on your finances. You need to repair your credit as soon as possible. It is no secret that taking bad credit loans will do more harm than good in the long run. These are only temporary stop gap measures that are actually best avoided in the first place. If you can improve your FICO score, everything in life becomes cheaper and more affordable. Get into the habit of monitoring your credit report at least once a year. You can get a free copy from the annualcreditreport.com website. Check for any suspicious errors and write in to dispute any wrong entries.
It is easy to find a lender for people with bad credit. However, repaying the loan is not as easy due to the increased interest fees even from BBB approved bad credit loan companies. If it is not worth the extra fees to borrow money, then just focus on savings and credit repair.