Smooth the Way to a Bad Credit Personal Loan

So, the rules you play by when you are seeking a bad credit personal loan are somewhat different than for those who have good credit histories. You will be in search of a cosigner. Why? Access to the market is why. You will be able to get the full amount you need. And coming along with that are better interest rates and easy-on -the-pocket repayment terms.

Bad Credit Realities

You are probably uneasy about those unresolved debts when you have time to think. And you probably remember the cause for most of them were medical or health problems or unexpected emergencies. Never the less, emergencies, medical problems, youthful indiscretion, poor choices, and sometimes bad luck, yield the same result – a bad credit rating.

Borrowers such as yourself give lenders pause. Your credit history indicates that you do have not paid on all your loans. Will the lender get his payments in the full amount and on time? He really has no idea. To offset that risk, the lender will usually offer higher than market interest rates. Will the lender be willing to give you the full amount you need? For whatever reason, the lender may have a cut-off limit set for bad credit borrowers and it could be well below the amount you really need.

Cosigner Realities

Finding a cosigner to ride along with you on a loan obligation trip is a somewhat tricky process. The overbearing part of it is that the cosigner must be able to step up and continue payments should you default for any reason – health, emergency, whatever. The cosigner must have a steady source of income and a very good credit rating.

You and the cosigner should shop around to find the loan with the best interest rates and the most comfortable repayment terms. And a loan that can offer you the full amount you need. You and the cosigner should have a repayment plan. You and the cosigner should be able to discuss personal financial obligations, including what happened in the past and why.

Risk Realities

Understanding why a cosigner is necessary to help you obtain a bad credit personal loan is not a great leap of thought. Having two people standing behind a loan eases the lender somewhat for two good reasons. Of course, the risk of the lender is reduced significantly. After all, he will have a person with documented wealth and an excellent credit rating backing up the loan. And he will understand that you are someone who can be trusted and believed because of the presence of the willing cosigner.

Stages on Getting These Loans Effectively

Obviously, it’s a definitely untrue thing that you can obtain such loans when your credit score is badly affected by unpaid debts, mortgages or your inability to perform your financial duties. Your loan application will likely to be declined by most lenders due to your poor credit record. For instance, LendingClub.com – which is a well-known online financial community which can bring together creditworthy borrowers and savvy investors, will not accept loan applicants who have lower than 600 FICO score.

Most common lending solutions that most lenders provide for people with poor credit history are debt consolidation loans and payday loans. However, here are the drawbacks of having these loans:

· Debt consolidation loans only treat the surface of the problem – meaning you need to make a large monthly repayment as all your outstanding debts are combined into one single (debt consolidation) loan.

· Payday loans actually make you pay more than usual because of its unreasonable high interest rates which can be more than 100 percent!

Therefore, you need to get a proper low interest loans from the right channel when you’ve lower than 600 FICO score. The right channel to get such financial assistance is from those non-traditional lenders who provide low interest personal loans with co-signer.

Here’s how you can get such financial assistance – which can be effectively done in 3 stages:

Stage 1: Finding reliable non-traditional lenders

1. Look for non-traditional lenders nearby or within your area that provide low interest loans personal loans with co-signer

2. Check out their legitimacy of their business through these major online resources including Better Business Bureau (BBB) directory, Google Map, and online personal finance forums and blogs.

Then, the hardest part is the following stage which you need to persuade someone to be your co-signer (or guarantor):

Stage 2: Looking for co-signer to back up your loan application

1. The ideal candidate (preferably your spouse or any one of your family members) has to possess a convincing credit score – at least 660 FICO score or above

2. Start a serious conversation with the candidate and explain how your financial situation can be resolved based on his/her consent (Note: Always keep a calm tone and don’t be too pushy throughout the whole conversation)

3. Present a constructive plan before the candidate to convince him/her that you’ve the ability to pay off the loan as agreed

Stage 3: Request for lower loan cost from the lender

1. Always request for lower interest rate or annual percentage rate (APR) when they acknowledge the candidate’s qualification as the co-signer and forego inquires on your credit report

2. Also opt for affordable monthly repayments so that you can repay low interest rate personal loan on schedule

3. Read the loan contract before you agree with the loan terms and conditions

Always put these 3 stages into full consideration when you’re looking for such loans – whether it’s from online or off-line. It is always better to do comparisons among different loan packages which are offered by various lenders in order to get an affordable low interest personal loan.

Help Make Bad Credit Personal Loans Easier

Just as in legal situations, cases involving bad credit histories came about under extenuating circumstances. This may give you some leeway with a lender. Also, credit reports often have errors. Find them and get them removed. The process is usually simple.

Acts of God may have prevented you from making a timely payments. Medical emergencies are another reason. If the person processing your loan sees that reasons for lapses were out of your control, this could swing approval for a bed credit personal loan in your direction.

Tip Three: Know Your Lender

Just as you would do a background check before you hire an employee, so should you check out a lender before you hire them. The general rule is that the bigger and more solid the lender, the better the deal will be. Security, stability, and the unlikelihood that they are scam artists are what these lenders have to offer.

While some of the smaller unknown loan groups may offer fantastic deals, some even without collateral, do not walk into a deal with usurious interest rates and other fine print calamities. However, there are smaller lenders who do provide an honest service.

Tip Four: Have a Handle on the Payments

Your income to debt ratio will figure almost as high as your credit history when it comes to landing a bad credit personal loan. After all your usual monthly obligations have been met, do you have enough left over to take on another payment? This is for your own peace of mind and also improves the chances for approval.

Of course, having a steady income and the wherewithal to cover the repayment terms is a must. If that solid base is not available, you could try to show the lender how using that money as an investment will give good return in the not too distant future. Of course, the plan will have to be feasible.

Tip Five: Read the Fine Print

Again, check your vendor. Checking Better Business Bureau listings can help. Consider: Who would lend to a person with bad credit? Either they are going to be an honest lender who will charge a somewhat higher than market interest rate because of the risk, or they will have a little trap designed to catch the desperate or the unwary.

Always read the fine print. Especially watch out for gradually increasing interest rates, or outrageous late fees or fees for other little things. Always be a cynic, you owe it to yourself to look for the dark side of things when shopping for a bad credit personal loan.

Tip Six: Make the Loan Work for You

Do not borrow more than you need. Shop around for the best interest rates. This loan is made to get you out of a bind, not drag you deeper into a debt hole. If you are taking the loan to pay off a bunch of other loans, be sure that your monthly payment is less than the sum of your usual payments, and that the interest is no higher than the median of your past loans.

A Step Towards Financial Freedom

A Closer Look at Poor Credit Lending Options

There are two major choices when it comes to loans: unsecured loans and secured loans. Most bad credit loans that are offered these days are secured loans. This means that the borrower secures the cash value of the loan through collateral, often a home or late model car. This gives the lender assurance that should the borrower fail to repay the loan, there will be something to take that has value. The risk in a secured loan is primarily the borrower’s. This means that secured loans have lower interest, higher payouts and longer terms.

The other option is an unsecured loan. These are more difficult to obtain if you have poor credit since two of the major requirements are a good credit history and a solid, high income. If you do not have either of these, your best chance at finding an unsecured loan is through the use of a cosigner. Unsecured loans are much riskier for the lender, since there is no collateral that backs the loan and therefore nothing but the signature of the borrower to guarantee repayment. Therefore, the amount of money that you can get with an unsecured loan is much lower than with a secured loan. Also, the terms tend to be shorter and the interest rates are higher.

Tips for Finding the Loan You Need

Because of the turbulent nature of the lending world right now, finding a loan through traditional methods, such as banks, is not as easy as it once was. Therefore, your best option for getting a bad credit loan is through online lenders. There are many options to choose from online, so the competition makes it easier to get the loan you need.

However, not all online lenders are the same. You need to make sure that you do thorough background checks on all lenders who you consider to make sure that they are not scam artists. You can use both financial websites for reviews as well as the ratings of the Better Business Bureau as a means to conduct this research.

Bad Credit Loans for Financial Freedom

Whether you need money for an emergency or simply want to consolidate debt, bad credit loans offer a really viable chance to turn your financial fate around. With many online lenders in business today, it is essential that you do background research and make certain that the lender you work with is legitimate. However, once a contract is entered into, you can rest assured that you are on the right track to gaining the financial freedom you have always wanted.

What Determines Credit Worthiness?

What a Credit Score Really Means

To start, the details for almost all loans that you look for will be determined based on your credit score. This is a number that can range anywhere between 300 and 850. The higher your score, the more creditworthy you are, since the score is said to predict the chances that you will repay a loan. A bad credit score is between 300-499.

There are several factors that go into the calculation of your credit score. They include your payment history on all accounts. That is, they want to know if you make your payments on time and if you pay more than the minimums required each month (especially on credit cards). Lenders will also look at your credit utilization ratio, which is the percentage of credit you have and how much you are currently using. They will want to know your length of credit history, longer you have been using credit, the better. And finally they will look at the types of credit that you use and any recent inquiries into your credit.

One other factor that goes into how your credit score is assessed is the legal end of things. Lenders will look into court judgments against you in the form of bankruptcies and liens on your income due to old debts. It is one thing in incur late fees, it is quite another to not make payments at all such that a company needs to sue you for the money. These sorts of histories are the biggest factors in a bad credit score.

Factors Other Than Credit

While your credit score is the number one element that will be used to assess your creditworthiness, a close second is your income and job stability. You can have a sterling credit rating, but if you have just been laid off or come off a string of unemployment creditors will be less likely to lend to you.

A general rule of thumb in terms of employment is the ability to show a solid income over a period of at least three months. You can do this with either paystubs or W2 forms. In addition, your income needs to be high enough to support the repayment of this new loan in addition to all other credit obligations you currently have. Therefore, you should make sure to write down a detailed budget prior to talking to a lender. This way you know how much you can afford and how much leeway you have.

What It All Means

Bottom line, your creditworthiness will be used to make a few important decisions. First, whether or not a lender will work with you in the first place. Many times this point is determined based on income. Even those with poor or bad credit scores can find loans if they have good employment. Next, your credit score will help to set the rate of interest. The lower your score, the higher the interest rate will be. Finally, the combination of both income and credit will determine how much money the lender will offer you.