How Can I Get Approved For A Personal Loan With Bad Credit?
By Sarah Dinkins
These loans are meant for borrowers whose bad credit ratings make it very difficult for them to obtain a mortgage loan or personal loan from traditional lenders. These mortgage loans are usually referred to as: Timely payment reward mortgages or affordable merit mortgages. Also, the personal loans for people with bad credit are called bad credit loans, poor credit loans, emergency loans, etc.
Common Characteristics
All bad credit loans share some common elements. For example, all of them are available at a higher interest rate than traditional loans (if the borrower remains punctual in paying all installments for the first 24 months, then the interest rate on these bad credit personal loans may decrease).
Also, the repayment program and the loan amount are limited due to bad credit. Even if the loan is secured, the applicant won't be able to get as much money and as stretchy repayment programs as with traditional loans. The risk involved in these financial transactions requires the lender to be stricter with the loan terms in order to reduce the losses to a minimum in case of default.
How to Proceed
So, in case you could not obtain standard loans, you can inquire your lender for a bad credit personal loan. But, if the problem persists and you are not able to obtain any kind of loan, then, seek the advice of your lender on the ways to rectify your credit problems. And after correcting the causes of your decline, Ask the lender how long you should wait to apply for it again.
For re-establishing your credit history, you should follow these suggestions:
Open a checking/savings account. This is a good way to reestablish your credit with a particular bank and it will also show your money management skills to the prospective lenders since banks report to credit bureaus on a regular basis. The key is to get credit from the bank as quickly as possible. It doesn't matter if it is only for small amounts. Actually requesting small amounts and paying back is an excellent way to improve your credit score.
After saving some money in your account, you can decide to transfer it to a certificate of deposit (CD) having a higher interest rate for a particular time period. Then, you can ask for a small personal loan, secured with your CD, from your bank. These loans are easy to qualify for given that the lender already has a way to recover his money in case you can't repay the loan.
Seek the help of a cosigner. In case you can't obtain a personal loan because of your bad credit, then you can request a relative or good friend having a better credit background to act as a cosigner. In this way, your friend or relative takes upon himself the responsibility of repaying your loan if you default and lenders are more confident in lending this way.
Summing Up
If you are suffering from the misfortune of having bad credit, you need not worry. You can still find lenders willing to give you
bad credit personal loans at the lowest possible rates. To save the time and the difficulty in finding the right lender, you can always search for lenders online. Just bear in mind all the above information and you'll do just fine finding the loan that suits your needs.
Sarah Dinkins is an Expert Loan Consultant in the financial industry that helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and other types of loans and financial products. At http://www.badcreditfinancialexperts.com/article/ she is continually adding new finance articles useful for those in need of professional advice.
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The Myth of the Bad Credit Personal Loan
By George Emerson
One of the great ironies of personal finance has always been that the people who need money the most are the ones who can't get a loan and the people who least need the money are the ones who can obtain credit most easily. Nowhere is this more evident than in the world of personal lending. Getting an unsecured or personal loan with bad credit has always been somewhat challenging but in recent years it has become virtually impossible. The subprime lending crisis and subsequent credit crunch have caused all banks to significantly tighten their lending standards. The first customers to get squeezed out of the equation are those with credit problems. The unfortunate reality in 2009 is that if you have bad credit, you will not be able to get an unsecured loan from a traditional bank.
Do a search on the web for "bad credit personal loans" and you will see hundreds of listings for websites promising to deliver the elusive cash without collateral that you so desperately need. Look closely and you will find that every single one of these offers will be for a payday loan. A payday loan is a completely different product than a traditional unsecured installment loan (often called a signature loan). Payday lenders do not evaluate your credit when making the decision whether or not to grant you a loan. Instead they simply debit your checking account automatically on your next payday. Of course the lender's significant fees are debited as well. This product can make sense for a short term emergency situation that requires cash but it does not accomplish the same thing as a personal loan which could allow you to repay over a much longer period, usually between 12 and 48 months. Personal loans also carry lower interest rates. Typically, personal loans carry annual percentage rates ("APR's") that are equal to or better than most credit cards. If you look at the average fees on a payday loan and converted them into the equivalent APR's you would be looking at mind-blowing rates of up to 350%. So, while a payday loan can be a good product for short term, emergency situations - it cannot replace the value of a personal loan.
So if you've got bad credit, need cash and cannot use payday loans to meet your needs, what are you to do? Assuming that a refinance with cash out or a home equity loan is not a viable option you are left looking for an unsecured loan. One interesting option is a relatively new phenomenon called social lending or peer to peer lending. These are professionally run networks that bring together individuals who wish to lend money and individuals who wish to borrow money. Some peer to peer lenders cater to people with bad credit (of course the interest rate will be higher). Social lending is one of the most exciting developments in the world of bad credit lending to come around in a long time.
More importantly, the most effective thing that you can do to help your situation is not a loan at all: improve your credit score. Improving your credit score will help make obtaining loans, both secured and unsecured, much easier and cheaper. How do you improve your credit score? The first thing you need to do is understand what is on your credit report. You can get a free credit report each year and it easy to do - just go to annualcreditreport.com and get it. Once you know what's on your credit report you can get to work on cleaning it up. If you find a mistake or discrepancy, make sure to contact the credit reporting agency and the lender in writing so that the mistake can be fixed, and your credit score can be improved.
Another way to improve your credit score quickly is to obtain a secured credit card. A secured credit card is a credit card which is secured by a cash deposit. Most cards can be converted to unsecured accounts or partially unsecured accounts after a period of regular and timely payments. Regardless of the account type, your regular and timely credit card payments will improve your score dramatically.
If your credit problems seem too big to tackle on your own you can enlist the help of a credit repair service. Just do your research and check with the BBB and ripoffreport.com to make sure that you pick a reputable credit repair company. This type of service can help you improve your credit score and will allow you to quit searching for that impossible to get bad credit personal loan. You will find that with a good credit score you can obtain a personal loan fairly easily, even in the midst of the current credit meltdown.
ConsumerFinanceReport.com [http://www.consumerfinancereport.com/] features articles, guidance, and commentary on a variety of personal finance topics, including bad credit personal loans [http://www.consumerfinancereport.com/personal-loans.htm].
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Approved Personal Loans With Bad Credit: Some Options Are Almost Guaranteed
By Donna N Hammond
There are lenders that will publicize the fact that loan approvals can be guaranteed given the right circumstances, but there is a catch to the idea. Everything rests on those circumstances, so not just anyone can get the green light. It means that securing approval on personal loans with bad credit cannot be guaranteed.
It is somewhat misleading to claim that guaranteed loan approval exists at all, but the reason why it is made is that, in certain circumstances, approval is pretty easy to secure. Even when low credit scores are a part of the equation, applicants can have a realistic chance of securing the funding they need.
The secret? Well, it all comes down to your choice of loan application, which lending institution is applied to and the ability to accept the limits that a given financial situation places on a personal loan application. So, knowing what the available options are is important. Here are 3 of them.
Loans With A Cosigner
The key issue for any lender is not credit scores or even loan sums, but whether or not the borrower will be able to make the repayments. Remember, a loan is an investment for them, and they want a return on it. It is this principal that dictates whether an application for a personal loan with bad credit is a risk for the lender.
The solution to this problem is a cosigner, otherwise known as a guarantor. When it comes to securing a modest loan, like $5,000, they are extremely useful. In fact, it is probably as close to securing guaranteed loan approval than a bad credit borrower is every likely to get.
But there are conditions. The cosigner usually needs to be a homeowner, have an excellent credit rating and a large enough income to make monthly repayments. Their advantage, after all, is to make the repayments on the personal loan in the event that the borrower is no longer able to.
Alternative Installment Loans
Normally, we think of installment loans as those that require regular repayments (usually monthly) over a set period of time. But the financial strains the credit industry finds itself under has moved the goalposts a little. Now, it is a flexible solution to those seeking a personal loan with bad credit, with the loan sum paid in cash installments.
This is a relatively new product, with loans of just $100 available in equal sums over a period of time - usually up to 12 months. The loan limit is usually at around $1,500, and having a source of income is essential - in fact, it is the key to securing a guaranteed loan approval.
There is no need to find a guarantor, so the interest rate charged is going to be a little more, but the structure of this personal loan means the repayment term is more flexible. Once it is ascertained that the loan is affordable, then approval is practically guaranteed.
Choosing a Payday Loan
This is a hugely popular option, but in terms of getting good terms on a personal loan with bad credit, it fails to impress. Bad credit borrowers frequently seek out the best bet when it comes to loans, but not always the best terms. Because a payday loan is granted on the back of an imminent paycheck, the chances of a successful application are greater.
Guaranteed loan approval is not exactly given however, since usually the loan must be repaid in one payment after just 30 days. And with the interest rate very high (30%), it means a $1,500 personal loan needs $1,950 to be paid off. That is a lot to take from one paycheck, but if it is affordable, then the loan is granted.
Donna Hammond is the author of this article. For more information about Bad Credit Unsecured Loan and Mortgages for Bad Credit please visit her website at QuickBadCreditLoans.com
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