Bad Credit Does Not Prevent You From Getting A Loan

Those young people struggling to build credit or those people experiencing financial problems are fully aware that getting a mortgage, landing a job, buying a new vehicle or getting home insurance is very difficult when you have poor credit. In what concerns mortgages, banks evaluate your credit score to decide if they should grant you a loan, to determine the interest rate and the amount of years they allocate you to give back all the money. When it comes to employment, credit score is an important factor that almost 50% of employees analyze during the application process. Furthermore, insurance companies believe that poor credit influences driving.

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Yes, they somehow associated accidents with low credit scores. A poor credit score also affects renting because some property owners might ask to see your credit report if you show interest in their properties. Utility companies evaluate their customers’ credit score periodically and when spotting bad credit, they do not hesitate to demand a larger deposit.

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Bad credit loans: secured and unsecured

Indeed, poor credit can result in encountering great obstacles in life. However, you should know that if you want to apply for a loan, you could do it despite of your low credit score. Fortunately, people with bad credit also have options. If you searched for bad credit personal loans, then you probably already saw useful information about secured and unsecured loans. For the first one, you have to use collateral, such as your vehicle or your house. For the second one, you just need to promise in writing that you will repay all the money, according to the terms and conditions imposed by the lender. Depending on your decision, you could receive a secured or an unsecured loan.

Obviously, your main objective should become improving your credit score, but until then you benefit from some alternatives. Bad credit loans, also known as no credit check loans, come with risks and you should identify them before filling in your application.

Alternatives for people with bad credit

When your credit ratings are not very good, you should avoid going to a bank. Instead, you should visit a local credit union because it represents a member-owned financial cooperative that does not pursue profit. This means that they will not judge you solely based on your credit score thus increasing the chances of getting the much-needed loan. You overall situation might convince them to give you a chance. Other options include peer-to-peer lenders and friends or family. In the first case, you practically borrow money on a platform just like other people who do it because they want to avoid the bank loan process.

These peer-to-peer lending networks experienced great popularity because they give you the possibility to bid for your loan. In the second case, many people out there financed their house or their car with the help of a close relative or a friend. If you think about it, taking into consideration that you already have a good relationship, this might indeed be a good idea.



About the Author

Ankur Shah
Ankur Shah is the founder of the Value Investing India Report, a leading independent, value oriented journal of the Indian financial markets. Ankur has more than eight years of equity research experience covering emerging markets, with a focus on India and South East Asia. He has worked as both a buy-side investment analyst for a global long/short equity hedge fund and a sell-side analyst for an emerging markets investment bank. Ankur is a graduate of Harvard Business School. You can learn more about his latest views on global markets at the Value Investing India Report. -- He can be emailed at AnkurShah47@gmail.com