Solving Your Problems with Loans for Poor Credit

Getting a poor credit personal loan can relieve a lot of financial stress when you need cash for any reason. Whether you need money for unexpected medical expenses, costly auto repairs or just to help with your day-to-day expenses, having a spotty credit history will not hinder your ability to qualify for such a loan. Unlike traditional banks that frown upon credit histories that might include any number of derogatory items, there are lenders available now that will work with you to get the loan you need to help get you through financially.Securing Your LoanThere are a number of lenders who specialize in servicing personal loans for those with bad credit. Instead of focusing on past financial problems, these lenders are more concerned about your ability to repay a loan based on your income and expenses today. Do be aware that because of your financial background, you will face higher interest rates on any loan than someone with good credit. It is in part because of the amount of risk the lender is assuming by granting you a loan.This actually helps you rebuild your credit because your lender will report your consistent payments to either one of the three major credit bureaus (TransUnion, Experian or Equifax) or all of them. When the bureau reassesses your credit score each quarter, you can see an improvement in your FICO score. Depending on what your loan terms are, you may even see a reduction in your interest rate if you make your payments in full and on time.You can apply for either a secured or unsecured bad credit personal loan. A secured loan requires you to put up an asset of value (either a property deed or a vehicle title) that you own as collateral. Pledging collateral instills a sense of confidence for the lender in you that you will repay the loan in a timely fashion so you will enjoy a lower interest rate and qualify for a higher loan amount. There is a risk with this loan if you default on this loan; the lender can legally take possession of your asset in order to make good on the loan, so consider this if you are thinking about applying for a secured loan.On the other hand, an unsecured loan, despite the higher interest you will face, does not require you to pledge collateral. Your eligibility for this type of loan will be dependent on your current monthly income and existing expenses. Typically with either type of bad credit loan, you can expect to have between twenty-four to sixty-four months to repay the loan, with interest and finance charges and you may qualify for amounts ranging from $2,500 to $20,000.Becoming a Sought After BorrowerIt is possible for you to work your way to good credit if you are approved for a bad credit personal loan. If you have a long-range goal of owning a home one day or getting your dream job, or living debt free eventually, you will be able to set the stage for that with this type of loan. Make your payments on time and fully; if you can, make more than the minimum payment in order to pay off the loan before the end of the term. You may even consider making your monthly payments earlier than when they are due every month.If you are getting your regular paycheck via direct deposit, speak to your human resources department or bank to set up an automatic payment that will withdraw the money on the due date. Be sure to keep the lines of communication open if you are not able to make your payment on time. The lender will be accommodating if you let them know well in advance of any problems you may encounter.