Personal Loans For Bad Credit

If you fall in the bad credit camp currently, you’ve probably encountered this yourself. Fortunately for you, many institutions believe that bad credit shouldn’t bar people from getting a loan.

Before we go deeper into bad credit loans and how they can work for you, let’s go through the different types of personal loans that are typically available. 

The quintessential personal loan is an unsecured one. Unsecured loans are where the collateral isn’t required to guarantee the loan, so you won’t lose any of your material possessions should you fail to make payments. Late payments will hurt your credit and your personal loan account could be subject to a collections process.

Secured loans are those that take the collateral. Auto loans will hold your vehicle as collateral while other loans can use your property to guarantee repayment. If the borrower doesn’t make repayments, the collateral can be seized by the lender in place of payment.

Debt consolidation loans are used to combine multiple debts into one loan with one payment. They’re a great way to reduce monthly costs and create a more affordable and easily manageable loan.

Bad credit will stop you from getting most loans out there. When a borrower has bad credit, it means they have debts that haven’t been paid in time, or at all, in the past. This indicates that the borrower may not pay future debts, so a lender who gives them money is taking a bigger risk.

If your FICO score is below 670, you will generally be prohibited from getting a loan from providers. It isn’t impossible, however, and many government-backed schemes mitigate risk for the lenders so that they cater to those with lower credit scores.

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