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Options Exist for Very Bad Credit Unsecured Personal Loans

To ease financial problems, borrowers with very bad credit scores are turning to non-traditional lenders offering unsecured personal loans. Successfully meeting the obligations of a very bad credit personal loan will improve credit ratings.

The year 2008 marked a very bad financial time for a lot of folks and many credit scores fell precipitously. The unemployment rate hovers to as much 12% and is averaged at 9%. That is part of the bad credit story. Because of these rough times, many traditional lenders such as banks and credit unions have employed a self-imposed credit crunch, raising their credit and qualifications for loans so that many borrowers, good credit or not, have trouble getting loans from them. Of course, the tightens the money flow that much more.

Borrowers Turn To Non-Traditional Lenders

To ease their financial burdens, borrowers with scores under 600 are seeking approval for loans that are not dependent on credit scores. Folks with scores under 600 are considered bad credit risks, but non-traditional lenders look for proof of job longevity and salary, proof of residency, proof of an active bank account, a social security number, and government issued identification. Loans usually range between $100 to $1500, with $500 being the usual amount.

High Interest Rates May Scare Some

These types of loans have rather high interest rates. They can cost any where from $15 to $35 per hundred borrowed, depending on state regulations. So, they are not cheap. The interest rates and fees are much higher than those from traditional lenders. The practice of high interest rates is due to the excess risk lenders take in lending to those with very bad credit histories. The repayment time of these loans requires a quick turnaround, usually within 15-90 days.

These Loans Can Be Extended

Extensions are available on these loan, but this can be where the bad credit borrower can push themselves deeper into debt. Say a borrower gets a $400 loan and gets monthly extensions at the rate of $100 in fees rates. After about six months that loan will have turned into $1,000 worth of debt. Taking out another loan to cover the payment on a previous loan can turn into a very costly enterprise.

Website Offers Aid from the Federal Trade Commission (FTC)

The Federal Trade Commission and the Obama administration have put up many free resources with much advice on how to survive these financially troubled times. Check out the website at: It is the duty of each person with very bad credit scores to pull themselves out of a bad credit and low finances circumstance. It does take a decade or more to finally realize a good credit score and enough savings socked away.

On Your Way to Improvement

If can see the bad credit personal through to its maturity according to the terms mandated in the contract you signed, you will be on your way to improving your credit scores. You cannot miss payments or ask for extensions if you want to improve your scores. After you successfully retire your loan, you may consider taking another one to improve you credit even further.

Borrowers Should Be Careful

Since you are encumbered with a bad credit ranking, it may be rather hard to land an unsecured personal loan. Banks and credit unions will not consider you. Non-traditional lenders will probably offer you loan but remember that the cost is rather hefty. However, if you use them in a responsible manner, they can meet the need for emergency cash or pressing needs, and the could be a great benefit to your bad credit history. Realize what obligations you are taking on, read the find print, and shop diligently to find the best interest rates and feesScience Articles, and the most comfortable repayment terms.

Article Tags: Unsecured Personal, Credit Scores, Interest Rates

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Devora Witts is a certified loan consultant who helps people get approved for Loans for People with Bad Credit and Bad Credit Mortgage Loans. To get aid with your financial situation you can visit her at

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