The higher your credit score is, the better your chances of getting a loan approved are. You can easily get a personal loan with a low interest rate without any hassle when your credit history is up to the mark. However, the real deal is to get a loan even with a poor or below average credit score. This is where people often struggle as they can’t just get their applications through.
Fortunately, there are several lenders and several platforms out there who specifically deal with bad credit loans. You just need to look for the right lender who can lend you some money to overcome your financial challenges.
What Makes A Bad Credit Loan Suitable For You?
You’ve probably been rejected for a loan mainly because of your credit score. This is the first thing lenders check when approving a loan or credit because the figure tells if you really are a reliable and suitable person eligible for the loan.
Loans for bad credit can be a game changer for you here not only because you’ll have funds that you need but also because you can then build and improve your credit score with them. All you need to do is, borrow a small amount, make timely monthly repayments without any delays and that’s it! That’s how you can improve your credit score and become eligible for better borrowing terms in future. Just remember that you should only look for a loan with bad credit when you really need one and can afford it too.
The Types Of Loans You Can Get With A Bad Credit
Your options aren’t just limited to personal loans. In fact, you can apply for a secured loan or a guarantor loan too. Let’s discuss all your options in detail;
Personal Loan
Personal loans are more like unsecured loans where you don’t have any collateral to offer to the lender. For example, if you don’t own a house or any other valuable asset that you can offer as a security then you can apply for a personal loan. With a bad credit score, your approval chances are quite less but it’s never a bad idea to try? You might get your personal loan but with a higher interest rate as compared to what other good-score consumers have to pay.
Secured Loan
A secured loan, just as the name implies, comes with a security. If you’ve been rejected for an unsecured loan then use your home, your car or any other valuable possession as a collateral to reduce the lender’s risk. It’s just that you need to be very careful when applying for this loan because if you don’t meet your repayments, you could end up losing your asset.
Guarantor Loan
A guarantor loan is when a friend of yours or some relative takes the guarantee that if you can’t pay your loan, he/she will be responsible for it then. This type of course comes with a risk and you’ll end up putting your loved ones in debt if you can’t afford to pay the amount back.
How Much Can You Borrow With A Bad Credit?
There’s no fixed figure to tell when you are borrowing with a bad credit. It all depends on your personal and financial circumstances but most importantly, it depends on the lender. There are platforms and organizations out there that deal with loans for people with bad credit and their range varies from $1000 to $25000 and sometimes more. It’s just that just because of your poor credit score, you might not get your desired lending amount if it’s a lot.
Other than your score, here are a few things lenders consider when approving your loan applications;
Your expenses and your income
Your credit score of course
The amount of debt that you are in
The reason why you need the loan in the first place
Whether you are looking for a secured loan or an unsecured loan.
If you want to improve your chances of getting a loan then it’s important to first see what you can really afford to borrow. You just need to make a budget first, check your expenses and your income and then decide the amount you can repay every month along with the interest.
Best Loan Options For People With Bad Credit
Whether you are looking for debt consolidation loans, personal loans or an emergency loan, here are a few best options that you can consider;
1-Best For Large Loan Amount–LightStream
Light Stream is without a doubt one of the best debt relief companies especially if you are looking for a larger amount of loan to borrow. The company offers loans up to $100,00 with flexible repayment terms of up to 20 years. If you want to qualify for a lower interest rate, you can apply with a co-borrower for an even larger amount as it will improve the chances of your application approval. What’s best is that this platform offers unsecured loans without any hard inquiries and you don’t need to worry about any additional fee or charges when getting the funds.
2-Best For Low Borrowing Amounts-Oportun
Looking for a reliable lender that offers low borrowing amounts without any hassle? Try Oportun and you sure won’t be disappointed with what the platform offers. With it, you can get a loan worth $300 to $10,000 with repayment terms 12-24 months. One of the main reasons why Oportun is a part of our list today is that it requires no credit history at all. So it’s not just for those with poor credit scores; in fact, if you are someone who never had any credit history, you can still qualify for a loan here.
3-Best As An Overall Bad Credit Loan-Upgrade
Upgrade offers a wide range of loan amounts with flexible repayment terms. No matter what your purpose of applying for a loan is, Upgrade will accommodate you without any trouble. Even if your credit score falls between 300 t0 689, you can still apply here and get your funds within 24 hours after the approval of your application. Here, you can apply with a co-borrower and if you have any collateral to offer, that would be a plus as you’ll get better interest rates with it.
4-Best For Secured Loans-Best Egg
With Best Egg, you’ve got two options; get an auto secured loan or get a homeowner secured loan. If you own a house, you can use the permanent fixtures inside as collateral for your loan. It can be anything from vanities to cabinets etc. In case of secured loans, Best Egg offers lower APR with larger amounts of loan. The company has fixed interest rates between 7.99%-35.99% depending on the amount you are borrowing and the repayment term. To qualify for a Best Egg personal loan, you need a minimum credit score of 580.
5-Best For Quick Funding-Avant
Avant is another great option that has a minimum credit score requirement of 550 which is the lowest till now. With it, you can get your funds the next day after applying. Whether you are looking for an emergency loan, debt consolidation loan or even a home improvement loan, Avant will cater to your requirements efficiently. The company offers loan amounts ranging from $2000 to $35000 with flexible repayment terms between 24 to 60 months. Moreover, the company offers a grace period of 10 days in case you are late on your repayments.
These are some of the most popular and easily available loan options for those dealing with a bad credit score. You just need to choose the lender that suits your requirements the best and offers the lowest interest on your loan with easy repayment terms and conditions.
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