As a borrower with bad credit, you’re typically going to have more options than someone with good credit. Several types of lenders specialize in lending to folks with less-than-stellar credit scores. When you apply for a bad-credit loan, remember to shop around.
What are Bad-Credit Loans?
A bad credit loan is a personal line of credit you can take when your credit score is too low. If you’ve had any late payments, overspending, or other red flags on your personal credit profile, this is the type of loan for you.
What is Considered a Bad Credit Score?
That’s different for each lender, but the good news is that your situation isn’t hopeless. Many people with a bad credit score get loans, and you can, too. Online lenders can be beneficial in this situation because they’re not tied to physical locations. But they may also offer borrowers a wider range of loan types, such as installment loans and installment-to-purchase loans, so the borrower can choose the one that will work best for them.
What Makes Up a bad Credit Score?
When you apply for credit, lenders will check various factors, including how much you owe and how late you’ve been on payments. The two main ones are:
- Your payment history: How often are your payments on time? This is by far the most important factor.
- Amounts owed: Are you over the maximum amount of credit allowed on any of your accounts? How much are you paying overall?
This factor is also significant.
How Can I Get a Bad-Credit Loan?
There are many different types of lenders who specialize in lending to people with less-than-stellar credit scores like I want a 500 loan, payday loans, and more. You can apply through the lender’s website by answering some questions about your income and assets, bank statements, tax returns, and other documents. What type of loan you qualify for will depend on your income and how much money is already outstanding on your credit accounts. The best way to see what kind of loan you qualify for is to fill out your details below.
How to Choose the Best Bad-Credit Loan Company
There are many different loans out there, and you should be cautious because some of these companies can put you in debt and/or hurt your credit. One thing you can do is read online reviews of all the lenders you’re considering.
Types of Bad-Credit Loans
There are many types of credit products available to someone with bad credit. Many are similar to their good-credit counterparts but with higher interest rates and shorter repayment periods. These are the most common: Installment loans and installment-to-purchase loans: In this type of loan, a borrower pays a set amount over time, either in one payment or more. The borrower then has a specified period of time to reduce the principal owed through additional payments or for the balance to go toward the APR. In this type of loan, a borrower pays a set amount over time, either in one payment or more.
The borrower then has a specified period of time to reduce the principal owed through additional payments or for the balance to go toward the APR. This is a short-term loan to be repaid in full on your next payday. Borrowers can usually borrow up to $500-$1,500 for a set amount of time, typically 2-4 weeks. This is normally an expensive form of borrowing compared to other products because they have large APRs, and there is virtually no way to lower them. This is a short-term loan to be repaid in full on your next payday. Borrowers can usually borrow up to $500-$1,500 for a set amount of time, typically 2-4 weeks.
How to Spot Bad-Credit Loan Scams
Trust your instincts, especially if you are asked to put down a deposit or only communicate through text or email. Your personal information should never be requested by an SMS text message, cold phone call, email, or someone that does not know what personal information, such as your credit card or bank account numbers. People with bad credit may not have all the rights typically provided by law to people with good credit, such as the cooling-off period. Instead, they’ll likely have limited legal consumer protections in place.
Always be wary of lending firms if they fail to explain their terms in plain language or provide them clearly on a written contract. Also, don’t compromise your own financial security by giving out any personal information until you’re sure the company is legitimate. If something sounds too good to be true, it probably is. Find out more from the Federal Trade Commission about how to protect yourself against identity theft and add a second layer of protection for yourself with an identity monitoring service that notifies you when someone applies for a loan or credit card in your name. If you can’t get back on your feet with bad credit, we’ve got all the best loans for those of us who have suffered major life events.
How Will Applying For a Poor-Credit Loan Impact my Credit Score?
Like any credit inquiry, you could see a slight dip in your score after applying for a loan. However, if your credit score is in the 500s or lower, likely, it will not affect your credit score at all. Sometimes poor-credit loans come into a bad name and follow through with their bad reputations, and become part of the “credit blacklist” that creditors use to determine who qualifies for credit in the marketplace. Sometimes
What Documents Are Required to Apply For a Bad Cedit Loan?
Documents required to apply are:
- a few pieces of personal identification (ID), including your photo ID;
- utility bill showing your name and address;
- your bank account book for solidifying the financial resources available.