Very Bad Credit Options for Unsecured Personal Loans

Since 2008, more and more folks are watching their credit scores bite the dust. The fact that the unemployment rate hovers from 9% to 12%, depending on the state, is part of the story. A self-imposed credit crunch by lending institutions such as banks and credit unions has tightened the flow of money through the economy as well.To ease cash flow problems, borrowers with very bad credit scores are turning to lenders who are offering unsecured personal loans. People with credit scores under 600 are considered lending risks. These borrowers would be prudent to understand exactly what it is they are getting into when it comes to interest rates, fees, and repayment conditions.Bad Credit Unsecured Personal Loans, The FactsApproval for an unsecured personal loan is not dependent on credit scores. The only considerations these lenders use are proof of salary and length of time employed, proof of residency, proof of an active bank account in good standing, a social security number, and a bona fide ID. Loans range from $100 to $1500 with the usual being around $500.These loans can cost anywhere from $15 to $35 per hundred borrowed depending on state regulations. They are not cheap. These charges are for interest rates and fees that are well above loans taken from conventional lenders. These high costs are imposed to cover the risk the lenders take in lending to bad credit borrowers. These loans can come due in 15 to 90 days.Extensions are usually available, and this is where bad credit borrowers drag themselves deeper into debt. If a borrower takes out a $400 loan and gets monthly extensions at an extra $100 in fees and rates, after six months the $400 loan will have turned into a $1,000 expense. Using loans of this nature to pay off other debts can be akin to robbing Peter to pay Paul.Federal Trade Commission Website Offers AssistancePresident Obama and his administrators at the Federal Trade Commission, have created many free resources, along with a huge amount of guidance regarding how to survive financially in these recessionary times. Check out the website: FTC.gov.It is incumbent upon citizens with bad credit scores to realize that it takes hard work and sacrifice to pull themselves out of a bad credit and low finances situation. Indeed, it could take years or even decades to reform credibility or improve credit status.Successfully meeting the obligations of a bad credit personal loan will help improve credit ratings. Though the fees and rates are very high. But the borrower cannot miss payments and should not ask for extensions. Borrowers should retire the loan and then perhaps get a new one, if necessary, and if possible.Let the Borrower BewareLanding a personal unsecured loan while encumbered with a bad credit history is not easy. Brick and mortar traditional lenders are unlikely to grant such loan. Non-traditional lenders will often approve such loans but they come with a hefty price tag.Used responsibly, a bad credit unsecured personal loan could be the way to meet an immediate and crucial need for cash and a benefit to a bad credit history. The borrower must realize what obligations they are incurring. Doing some diligent shopping to find the best rates and fees is absolutely necessary.