Do you find yourself unable to get ahead?
No matter how you manage your money, how much you save or how many extra shifts you take, you just can’t seem to get a break?
Finances seem to work in cycles: if you are in a good place, you can use that to make investments and wise purchases.
If you find yourself in a bad place, it seems there are few options that don’t put you further behind.
Sometimes all you need is a loan to gain an advantage. While it probably isn’t enough to pay off your debts, it can be what you need to get started.
But how do you even qualify for a loan with bad credit?
Below we’ll look at the advantages and disadvantages of a bad credit loan, and what options you have.
What Is A Bad Credit Loan?
What is a bad credit loan, anyway?
A conventional loan is usually tied to your credit score. By having proven your ability to make smart financial choices, the lender will offer an amount of money at a set interest rate. Having a high credit score usually results in a lower interest rate.
These loans are generally high-dollar value and can be long-term.
Bad credit loans, on the other hand, are for people who can’t count on their credit score to provide them with a loan.
What Causes Bad Credit
Having a bad credit rating can make it very difficult to gain financial advantages. Things that can cause someone to have a poor credit rating are as follows:
- Late payments
- Failure to pay
- Owing collections agencies
- Filing bankruptcy
What the above all have in common is the failure to satisfy a financial agreement. Whether it’s the failure to pay off a credit card or letting a phone bill go to collections, accepting money, products or services without paying them back will hurt your credit score.
How Bad Credit Loans Can Help
There are two major ways a bad credit loan can help improve a difficult financial situation.
The first helps manage the short-term stress of being in a difficult situation while the second can actually help you turn things around for the long-term.
Get Some Breathing Room
One of the most difficult things about having money problems is feeling trapped. It can be overwhelming to be unable to meet your needs when money seems to go quicker than it appears.
A bad credit loan can help give you a boost. By receiving a lump sum payment, you can often get a handle on the most immediate concerns.
Being free from those pressing issues can give you the breathing room you need. Take it and make a plan for how to keep moving forward.
Better Your Rating
Believe it or not, but that bad credit loan can actually be your key to improving your credit score.
By borrowing money and paying it back on time, you’re actually demonstrating your ability to be financially responsible. Taking out one loan and paying it back won’t immediately improve your situation, but it helps. Most importantly, it puts you on the right track to make real and meaningful improvements.
Where to Find Help
People with poor credit ratings are often too risky for the big financial institutions.
This can lead you to a number of smaller organizations that offer smaller, shorter-term loans that aren’t dependent on your credit rating.
There are things to be careful of, though.
As people in this situation can be quite desperate, there are businesses out there designed to take advantage of that desperation.
Taking a loan without properly understanding the terms can actually have a much worse impact on your situation, regardless of what temporary relief it may offer.
Especially with the rise of the internet, it’s never been easier for scam agencies to target those in need.
Some things to look out for are:
- Upfront fees
- Unregistered business
- No physical address
- Spam emails
Any agency that deals with bad credit loans should have protocols in place. These will include requiring you to prove your identity, as well as demonstrating that you do have the means to pay back any amount you borrow.
You’ll also want to know that they report to credit agencies when you pay back your loans. Unless they do this, your credit score won’t reflect your proven financial responsibilities.
The agency should also be realistic about your situation and offer you some options if you have difficulty paying back what you owe. While you’re always responsible for your agreements, it would be counter-intuitive for an agency to lend to an at-risk customer and fail to accommodate for the risk.
Whether it’s a one-time forgiveness or a flat-free late-charge, they should have reasonable alternatives to help you manage your responsibilities.
Money management is one of the most important responsibilities we have. It has a massive influence on our ability to achieve our goals.
Falling behind doesn’t make you a bad person. There are a million reasons why people can and do fall behind every day.
Needing a bad credit loan can be what you need to get that fighting chance at improving your situation.
Be realistic about where you are and what you need. You can find a lending agency that is willing to help you work towards financial freedom.
Don’t settle for the first agency willing to lay money down. Find someone that respects your situation and will help you improve it.
We are regularly helping people in difficult financial straits get the opportunity they need to overcome these difficulties. We work every day to help them break free from poor credit and get the life they want to live.
If you have any questions or concerns, we’re always here to help. Why not fill out an application form and see how we can help you today.