You may be aware that you have a low (or bad) credit score, or you may not have realised that your credit score is much lower than you would like it to be. Of course, your credit score isn’t an issue until you need to use it, which may be why you haven’t been too concerned about it before. However, now that you are in need of credit, such as via a loan, you may be starting to panic about what steps you can take to be accepted for a loan.
After trying to ascertain a loan from your bank or attempting to take out a credit card, you may feel like your bad credit is going to prevent you from getting the funds that you need and make matters even more stressful. However, just because you have bad credit, that doesn’t have to mean that you cannot take out a loan – there are steps that you can take to make getting a loan more likely.
There are plenty of instalment loans for bad credit available; it’s just a case of knowing what steps you need to take to get them.
Look for specific ‘bad credit loans’
These loans are designed especially for people who have bad credit scores and are unable to take out ‘normal’ loans. The issue with these loans, however, is that often they come with far higher rates of APR. Of course, that being said, if you require a loan and can’t get one from your bank or take out a credit card because of your poor credit, paying a higher rate of APR may not seem so bad. The best way to find this kind of loan is to Google ‘bad credit loans’ and see what comes up, just make sure to only opt for a properly regulated loan that comes from a reputable source.
Choose between secured and unsecured
There are two types of bad credit loans; these are secured and unsecured. A secured loan uses something that you own as collateral for your debt; this could be your home or car, for instance. Whereas unsecured loans don’t do this, they simply rely on you paying back the funds. Secured loans might be easier to get, but they aren’t always a good option, as if you fail to make a payment the loan company can take whatever you’ve put up as collateral.
Compare, compare, compare
When it comes to finding an instalment loan for bad credit, it’s important to take your time choosing which route to go down. Make sure to compare your options, so that you don’t dive into the wrong loan. You may find that a guarantor loan could be an excellent option for you, as these don’t require collateral, just someone with a good credit rating to guarantor your loan, so that should you miss a payment, they will be held accountable instead.
Until you need to borrow money, you don’t realise how detrimental having a poor credit score can be. The issue with a low credit score is that even if you can afford to pay the loan off, your credit score may prevent you from accessing the funds that you need from a bank loan or credit card, which is where bad credit loans come in.