Nobody wants a poor credit rating – it makes it look as though you’re irresponsible with your money (which, to be fair, a lot of people with bad credit can be) and really gets in the way when you’re trying to arrange things like credit cards or loans with banks and lenders. While it can certainly make things harder though, it’s not impossible to be approved for credit if you have problems on your record… providing you know where to look, that is.
The trick to finding a loan for bad credit holders, not surprisingly, is to avoid going straight to a big bank or major lender and try going to a loan broker instead. Sure, it’s possible to do all the legwork yourself and find a few decent lenders willing to offer such loans, but getting a handle on all your loan options at once can incredibly difficult since the best rate may not always be the first one you find. That’s why loan brokers can be prove to be very useful indeed – since they often have a huge amount of lenders and loan providers on their books, they can find a huge number of Bad Credit Loan options for you very quickly. As with the loans themselves though, finding the right broker is important. Not only do some brokers have access to more lenders and loan providers than others, but the fees they charge for their services vary significantly so it’s worth going with one that has a good reputation and large range of lenders to choose from.
Although they may seem like the only loan option available to people with poor credit ratings, Bad Credit Loans actually have their uses. Certainly, the higher interest rate over more conventional loans tips the scales in favour of the lenders, as does the fact that being approved for an unsecured Bad Credit Loans can harder than getting a secured one since loan providers like some form of collateral to insure the loan against should the borrower prove to as unreliable as their credit history would suggest. However, making regular repayments against a Bad Credit Loan can actually bring your credit record back from the brink and lift your rating to something more respectable, making it possible for you to secure more traditional forms of credit in the future. And while the idea of having a chunk of money to spend on anything you please always sounds nice, Bad Credit Loans can also be used as a means of debt consolidation instead to help clear large amounts of existing debt (like credit and store cards), bringing everything together into one single affordable monthly payment.
In Summary
A loan for bad credit…
- Is known as a Bad Credit Loan
- Can, over time, help improve your credit rating if you keep up repayments
- Usually has a higher interest rate than other loan products
- Is easier to get if you can secure the loan against collateral
- Can be used to consolidate existing debts and make them more affordable.
- Are easily sourced with the help of a reputable loan broker
Copyright: Individual Finance, 2010