Poor Credit Loans

Information current as of

Let's first examine credit ratings and credit scores. When you want to borrow money to buy a car, furniture, house or any other reason, the lender will evalute your credit rating. They will look at your FICO credit score to see what kind of risk you are and try to determine how well you handle money and your risk to them as a borrower. They don't want to lose money any more than you do. It's unfortunate, but your entire financial history is boiled down to a single number whether you like it or not. The scale ranges from 300-850 and is used by 75% of banks and lending institutions for all loan requests. If you're FICO score is less than 620 you are considered high risk and either won't be given a loan at all or will have one with a much higher interest rate. Depending on your level of urgency, accepting this poor credit loan offer is up to you.

Poor Credit Loans cover pretty much all types of loans that the borrower may be interested in. These include personal loans for vacations and tangible items, payday loans, student loans, signature loans, house loans (mortgages and refinancing), auto loans, etc. You can often lower the interest rate by getting a secured loan. This means you put up collateral that the lender is then authorized to reposess if you fail to make your payments.  Fully unsecured loans have much more risk and generally have higher interest rates until your credit rating is high enough.

How to Qualify for Poor Credit Loans

Poor Credit Loans are designed for borrowers with a credit score of 619 or lower. The borrower should not currently be involved in bankruptcy. Even people with a history of bankruptcy more than ten years ago may qualify. Having an income source is required, and if you're self employed you can also qualify as long as your income records are adequate (be prepared to show tax forms in some cases).

Advantages - Reasons to Get this Loan

• Poor Credit Loans give money to needy borrowers who wouldn’t otherwise qualify for normal loans.
  
• Borrowers have a chance to consolidate debts and gain control over their financial situation.
• Those with poor credit can still buy a home or car of their own.
• Poor credit loans are available even for personal loans which don't require an explanation of need. These are often used for vacations or household purchases.
• You can begin to improve your credit rating by making the monthly payments on time and in full. If you have chosen to consolidate other bills it will also get other lenders and merchants off your back.
• Even though the interest rate is higher, a responsible borrower will get a boost of triumph and accomplishment when they take that step to regain control of their financial life.
• Poor credit loans can provide desperate emergency funding for medical issues. Payday loans also help out during these emergencies.
  
  
  

Disadvantages - What to Watch Out For

• Lenders are strict about repayment. Missing a payment or underpaying poor credit loans can have a disasterous affect on the interest rate of the loan, making it even higher, and destroying your credit rating even more. You could lose your chance at any future loans for a long time.
• Interest rates are higher on poor credit loans than for regular loans.
• If the loan is secured with collateral such as a vehicle or home, those possessions could be lost if the borrower is unable to repay the loan.