I Can’t Get A Loan With Bad Credit, Can I?
Most people take one look at a low credit score and immediately assume that there is no way to get a loan. After all, a bad credit history comes from not paying off previous loans, and that makes you a bad risk for new credit, right? Getting into trouble with credit cards means that there are no lenders out there who will give you a loan, right?
Well, that’s only partially right.
There are loan options available for people with bad credit. Terms and agreements may not be as favorable, and the process may take some time and patience, but it is possible to still get a loan with a low credit score or bad credit history.
Getting A Loan With Bad Credit
The most common means of getting a loan with less-than-favorable credit is to find a co-signer. A co-signer must be a person with a clean credit history who is willing to shoulder the responsibility of the loan with you. Essentially, a co-signer is saying that they will make sure the loan payments are paid, even if they have to pay it themselves.
But co-signing is a tricky business. Normally, a co-signer is a parent, loved one, or close friend, and if something goes wrong with the agreement the relationship between you could become very sour. Co-signing can be very stressful, and you may risk harming relationships if you cannot make your payments.
A person who is categorized as a credit risk may be able to get a loan from a lending company by themselves as well. However, a bad credit history usually means higher interest rates. While someone with good credit may be able to get a loan with 0% interest, someone with bad credit may end up paying as high as 24%. This obviously means much higher monthly payments.
Another commonly used means of obtaining a loan with bad credit is agreeing to a secured loan. For instance, you may be able to get a loan for a piece of property, such as:
• A Vehicle
• A Home
• An Undeveloped Property
• A Commercial Property
You can use that piece of property as collateral for the loan. If you cannot pay your payments, the property is repossessed. In this way, the bank or lender can re-sell the property to get their money back, so they risk very little in approving the loan.
The good news is that if a person with bad credit is able to secure a loan they can rebuild their credit quickly with timely payments. That puts them on the road toward financial security and a much more favorable credit report.
Get Help From The Top Phoenix Credit Repair Firm
More often than people realize, a bad credit score isn’t entirely their fault. False and outdated information on your credit report could be dragging your credit score down and keeping you from getting an unsecured loan with decent terms.
For more information on how bad reporting could be harming your credit score, contact Credit Absolute today.
For help repairing your credit in Chandler, Arizona, click here.