When I lost my job I thought that is the end of the world and didn’t know how to proceed further in life. I was confused and my monthly bills were piling and glaring at me. I knew I was getting into deep debt if I don’t reign in my expenses. But with very little money in my kitty how do I manage this? A friend of mine suggested that I go in for bad credit loans. The word loan spelled disaster for me and so I tried to steer clear of it. But to no avail. That is when I decided that I need to improve my credit rating and have to take a bad credit loan to do so.
What is a Bad Credit Loan?
Bad credit loans are reserved for those with dreadful credit looking for a personal loan. Many lenders specialize in providing bad credit loans to clients. Of course, paying back a bad credit loan like clockwork with attention paid to providing more than the minimum payment each month can help boost your credit rating. The downside is that high interest rates are the norm, given your past credit history. A rule of thumb: the worse your credit check, the higher the interest rates.
Who can avail it?
Besides financial aid from the rich grandpa, bad credit loans can be helped by making payments on time, every time. Before lenders can qualify you, your income to debt ratio is carefully examined. In addition, a credit check will look for number of open accounts, late fees, and even inquiries to the lender (considered bad.) If your income to debt ratio is sound, bona fide financing options are available for the taking. For those with bad credit histories, a bad credit loan is inevitable.
How does it work?
A common practice amongst credit card users is never conducting a credit check prior to applying for bad credit loans. Remember, interest rates can always be bargained with banking institutions. By knowing your credit score, borrowers can gain leverage in getting lower finance charges on their bad credit loans. In addition, a credit check allows borrowers to point out any recording errors prior to applying. The top credit bureaus in the country can be found at the top of Google search listings; although many companies offer this service for free in exchange for a commitment.
Improving credit comes with times. Many credit bureaus are able to assist you whenever necessary with debt consolidation and debt negotiation counseling that aims towards creating a reasonable payment plan for troubled lenders. Remember, your credit report (available for a small fee at credit check sites) should be reviewed at least twice a year. You can also subscribe to credit reporting services that provide updates on your credit report periodically. Of course, a general rule of thumb for bad credit loan borrowers is to borrow as little as possible. Accumulating debt can only cause the interest rate monsters to swallow you with an excess of finance charges and fees.
Finally the only solution to all your financial problems is to earn a good income. Besides, keeping your expenses within limit will help you keep your credit score attractive enough for future purchases.