Consumers with a bad credit score can get a loan despite the score they have. This loan option is called a bad credit loan. A bad credit loan is a specialized loan option that gives consumers access to credit facilities, while helping to build their credit alongside.
If you’re one of the consumers with a bad credit score, you’re in the right place. Here, you’ll learn a lot about bad credit loan options, starting from where you can acquire one if you’re planning to prequalify.
Where Can Consumers Get a Bad Credit Loan?
If you’re looking for poor credit loans in Ogden Utah, Texas, or any state in the US, you should start looking online first. Online lenders are willing to offer consumers a bad credit loan. As a result, most consumers who suffer from a bad credit score resort to them.
Another lender that’ll be willing to offer you a loan is your local credit union. A credit union is a financial cooperative that has the same financial services as a traditional bank. Most of the time, credit unions are created, owned, and run by their members.
Another option for you is peer-to-peer lenders or P2P. However, you must be cautious when acquiring a loan from P2P lenders. P2P can sometimes pose risks to the consumer, such as high interest rates and penalty fees. Moreover, it also has a high credit risk in case you default, and there’ll be a lot of additional fees. You’ll be asked to pay a registration fee, borrower’s fee, listing fee, and the like.
Take time choosing the ones you think are best for your needs. Payday lenders can as well be a great option for you. But remember that a payday loan is a short-term loan, which means that you have to pay the amount you borrowed plus the interest rate on your next payday schedule.
Also, avoid acquiring a loan from a traditional bank and lenders as they have strict requirements. If you try to apply to these lenders with a bad credit score, expect to get your application rejected.
How to Acquire a Bad Credit Loan
You can follow the steps below when you’re planning to apply for a bad credit loan:
Check Your Credit Score
Before anything else, you must first look into your credit score. There are two types of credit checks: the soft credit check and the hard credit check. You can run a credit check from the three major credit bureaus, which are Experian, Equifax, and TransUnion.
Soft credit checks will have no impact on your credit score. One example of a soft credit check is self-inquiry. Meanwhile, a hard credit check can significantly impact your credit record. If someone makes a hard inquiry on your credit record, it will reflect on your credit history.
Knowing your exact credit score will help you jumpstart your search for a lender that’ll appropriately match your credit history. This way, your search will be easy and quick compared to not knowing your numbers.
Explore Your Lender Options
Now that you know your credit score, it’s now time to search for the best lender for you. Use the internet to investigate and look at which lender offers the best deal. Take your time in exploring your options to improve your chances of getting approved.
Inquire for available loans for bad credit consumers and their requirements. It’s also best if you ask these lenders and base your decision on their answers. Whatever question you have in mind, don’t hesitate to ask. You can ask about how much money you can borrow, how long you’ll have to pay, the interest rate, or any additional fees you need to pay first.
Gather All Information and Documents for Application
After choosing a lender, it’s time to gather all the information and documents they need. Most lenders will ask for information about you, such as your employment history, source of income, household expenses, outstanding debts, and more.
Along with this information, you must prepare documentation to prove that you’re stating the facts. Bad credit lenders might also require you to provide a cosigner or collateral as a security for your loan.
Collateral can be anything valuable, such as a car, a boat, or a house. Therefore, it’s best to have something ready before filling out that application form. Also, it’s best to look for a trustworthy person that can become your cosigner.
You can ask a family member or a close friend. Make sure that the person you choose has a good credit history, as it can increase your chance of being approved.
Apply for the Bad Credit Loan
After gathering all the information and documents, you can now apply for a bad credit loan. But remember to apply for one loan only. Hence, take your time in exploring your options.
Each time you apply for a loan, the lender performs a hard pull on your credit history, which reflects on your credit record.
It’s also advisable to prequalify for a loan first before filling up the application form. When you prequalify for a loan, the lender will tell you the amount you are qualified to borrow and the terms you need to observe when you’ll be granted the loan.
Prequalifying a loan won’t impact your credit record as the lender will only perform a soft pull on your credit history.
Is It Safe to Acquire a Bad Credit Loan?
As long as you’re very careful in choosing the lender, you’ll find one that fits your needs. Make sure that you educate yourself about the lender by checking their reviews online, their BBB rating, and their payment requirements. Lastly, make sure to follow the tips we’ve discussed so far to ensure that you’ll be successful in getting a bad credit loan.