Need a Loan But Have Poor Credit? Keep These 6 Facts in Mind!
Your credit is definitely poor. That will make it more difficult to obtain financing for any purpose. Even so, it pays to remember that there are loans for people with very bad credit available. You just have to spend some time investigating potential lenders and find out who will provide the best overall lending arrangement. Along the way, there are a few basic facts that you’ll learn. Here are six examples of what you will discover.
You’re Not the Only One With Poor Credit
A 2017 survey took a look at credit scores throughout Canada during the calendar year of 2015. What the survey indicated is that around 2.85% of Canadian residents has scores of 520 or less. That’s a range most lenders would consider to be extremely high risk. An additional 15% of the populace had credit scores between 520 and 680. That would usually be considered a bad or poor score.
The bottom line is that you do have company. Even better, some of those with scores that are in the same range as yours are able to obtain financing. It required researching lenders, but they found one that was willing to work with them based on factors other than their low scores.
Not All Bad Credit Loans are Secured
Another fact is that not all bad credit loans are secured. You might think that it will be necessary to pledge an asset like your car or home in order to get financing. While secured loans for those with poor credit are out there, you will also find options for unsecured loans that are worth considering.
You may be further surprised that there’s little to no different in the terms and conditions associated with these different loan types. In fact, it may be hard to find much difference between a secured loan offered by one lender and an unsecured loan provided by a different one.
The Interest Rates and Terms are Better Than You May Think
With both secured and unsecured bad credit loans, you may assume that the interest rates and terms will be less attractive than the loans offered to people with higher credit scores. While that’s true, the difference may not be as severe as you think. The only way to know for sure is to find a lender and see what sort of arrangement can be worked out.
Do expect to pay a higher rate of interest. You may or may not find that you have fewer protections with a high risk loan. There may also be some additional fees that you will either pay of up front or have bundled into the amount that you eventually repay. Even so, the overall loan may be a better deal than you hoped to get.
Many Bad Credit Lenders Do Report to the Major Credit Bureaus
You already know that some types of lenders don’t report to the major credit bureaus. That’s typically lenders who offer short-term loans that have to be repaid within a few weeks or a couple of months. That’s not the type of loan arrangement you want. What you desire is a loan that’s more traditional in terms of duration and repayment terms.
Bad credit lenders who offer loans with longer repayment periods are most likely to submit reports regularly to the major credit bureaus. That’s to your advantage, since reports of those timely payments will help increase your credit score over time. The difference between your score when you’re approved and when you may that final payment is likely to be more than you thought possible.
Some Bad Credit Lenders Will Consider Multiple Income Streams
If someone tells you that all bad credit lenders only consider people with jobs, don’t let that stop you from looking for a loan. There are a number of lenders who are more interested in the fact that you have steady income and less about the actual source. That means if you’re receiving any type of government benefit that’s deposited into your bank account every month, have income from a trust fund, or are receiving benefits from pensions, there’s a good chance of being approved.
Approval Times are Faster Than Many People Realize
You may hear that bed credit lenders take longer to evaluate and make decisions about loan applications. That’s not always the case. Assuming you provide all the data that the lender needs, it’s possible to be approved and receive an offer in a single business day. Even if there are some additional questions to settle, it’s not unusual for these types of lenders to make a decision in two or three business days. That means you won’t be left hanging for a week or more, wondering if your application will be approved.
Don’t assume that your present bad credit automatically excludes you from obtaining financing. There are lenders who are willing to take a look at your circumstances and determine if you meet their basic qualifications. If so, you can expect the application to be approved and have an offer in your hands sooner rather than later.