If you are in financial debt and have a bad credit history you may struggle to get a loan from the lenders. You can however still get a loan; you only need to follow a few steps. There are a lot of companies that specialise with people with bad credit history. A bad credit history usually results from making late payments on your bills, defaulting on your credit or loan or missing scheduled payments. You have to be prepared to pay more for the loan due to bad credit penalties.
Why is the loan so expensive?
People with bad credit history usually get very unattractive loan deals due to a number of reasons. Firstly they are seen by lenders as high risk. According to the lender, the fact that they are in this situation is because they were not responsible. Even if they take steps to repair their credit they still get expensive loan deals. The interest rate that they get for any amount of loan is generally high as compared to a borrower that has got a good credit history. You will also get a smaller loan figure if your credit history is not so good.
Lenders have access to your credit report
When you submit your loan application, the first thing that lenders do is to check and verify your credit status with the credit bureaus. It is therefore your duty to make sure that you work on improving your credit history first before you can apply for a loan. You do this by paying off your current and existing debt as well as not missing any scheduled payment. This is the only way you can increase your credit score. This is what you should also do after filing bankruptcy.
Secured and unsecured bad credit loans
There are basically 2 types of negative credit loans, a secured and unsecured negative credit loans. A secured bad credit loan is whereby a borrower with bad credit is required to secure his loan usually using an asset. The collateral that you use for this type of loan could be your house or a car. Alternatively you could obtain a secured credit card and deposit some money in that account.
It is however not easy to get a loan with unsecured bad credit because the lender sees you as a high risk.
Tips and comments:
If you are in an emergency and need liquid cash, you can apply for payday bad credit loans. Lenders offering this type of a loan do not carry out credit checks so it is very easy to qualify. You only need to be on a regular job to prove to the lender that you will be able to pay back the loan on your next payday. Payday loans have got a few disadvantages however. You only get a small amount and they are usually expensive in terms of the high interest rates that they charge. There are many lenders that offer this type of loan, you only need to do a bit of some research.