Poor credit is a serious financial illness of an individual that requires adequate treatment. Bad credit is often a result of irresponsible behavior in the past, such as late payments, delinquencies, and bankruptcies. Sometimes it could be a result of force majeure circumstances: a divorce, a job loss, or a serious medical condition. No matter what the reasons may have been that led to poor credit score, bad credit always disables a person once it comes to getting loans. It does not mean, however, that getting a loan is not impossible, it is just that more effort and time is needed in order to get financing. There are a number of lenders that developed financing programs specifically oriented towards poor credit borrowers.
Types of Bad Credit Loans
Loans that are available to poor credit borrowers are offered in two forms: secured and unsecured. Secured loans require collateral to be pledged in order to obtain financing. While any asset of value may serve as collateral, the two most commonly used are homes and cars. While secured loans have great benefits, such as lower rates and less restrictive terms overall, they may not be a right solution to everybody. Some poor credit borrowers may not want to risk their property, or simply may not have equity in their home or car. Others may not have any assets to pledge altogether. In such cases, unsecured loans are the best and only solution. While unsecured loans may be somewhat restrictive once it comes to underwriting, they are widely available to bad credit borrowers.
Sources of Bad Credit Loans
Many people make a mistake of trying to get a bad credit loan at their local bank. Most try endless number of times facing nothing, but rejection and worsening credit, as inquiries placed during application process drive the credit scores down. It is important to know that most bad credit loans are not offered by banks. Private lending companies are the ones that issue the majority of personal loans suited for the needs of poor credit borrowers. While they may let you enjoy relaxed requirements, they often endorse higher interest and charges than your local bank would. However, they help you serve two main purposes: getting necessary financing and treating your poor credit with opportunity to raise your credit score with timely payments on a bad credit loan.
Finding Poor Credit Loans
Finding bad credit loans is not as difficult as one may think. Since most lenders that issue poor credit loans do not have traditional brick-and-mortar structure, like banks do, they mostly operate online or through a network of credit brokers. While brokers may of great help in finding a loan that you may be approved for, it is better to conduct online search to find bad credit loans first. Needless to say, you should stay away from questionable websites – always check the legitimacy of all lenders you come across to avoid serious issues, such as identity theft. Once you will find several lenders that seem appealing to you, it is time to submit applications and collect loan quotes. They all would most likely differ in terms of loan amounts, interest rates, etc. It is up to you then, to choose a poor credit loan offer that suits you best.