Contrary to what many people believe, it is possible to get
a loan with bad credit. In fact, your credit may not even
be as poor as you think. You can see exactly what your
credit history reflects by taking advantage of the free
credit report each of the major credit reporting agencies
must by law provide upon request annually. If your credit
score is in the 550 range or lower, you are considered to
have poor credit.
Besides your credit score, your credit history will help
determine whether or not a lender will extend you credit.
Your credit history is different than your credit score; it
provides a more detailed record of your use of credit than
could a simple number. Your credit history report reveals
not only the timeliness of your payments to creditors, but
also the number of accounts you have open, the balances of
each of them, and your total amount of debt.
It is entirely possible to get an unsecured loan with bad
credit. The bad news is that you will pay dearly when it
comes to the interest rate on your loan. Lenders providing
unsecured loans must somehow mitigate the risk they incur
by not requiring security for the loan. They do this by
charging much higher interest rates than for a comparable
secured loan. Couple this with bad credit, and the
interest rate may skyrocket to the point where it may not
be the best option for finding a loan.
A better option for getting a loan with bad credit could be
a secured loan. As the name suggests, a secured loan
requires that you put up some type of security to protect
the lender in the event you default on the loan. A
mortgage is an example of a large secured loan, as is an
auto loan. Failure on the part of the borrower to meet the
terms of the loan agreement could result in foreclosure on
a home, or repossession of an automobile or a boat.
You may be interested in getting a home equity loan or line
of credit, or doing a cash out refinance loan on your home.
Your credit history will be taken into consideration,
though there are FHA loans, Fannie Mae Loans, and VA loans
backed by the US government that have less stringent credit
requirements than traditional mortgages.
Besides homes and automobiles, a plot of land may also be
used for collateral on an unsecured loan. In fact,
anything that is fixed to the property that has significant
tangible value can normally be considered as security for a
loan. Other valuables like jewelry and antiques may
sometimes be used as collateral depending on the lender,
though a loan backed by smaller assets will probably carry
a higher interest rate than a loan backed by real estate or
a vehicle.
If the item you wish to purchase is not an immediate
necessity, you could consider delaying the purchase while
you work on improving your credit. With good credit you
will be more likely to be approved for a loan, whether
secured or unsecured. Just as importantly, you will be
able to avoid bad credit lenders who may have less than
ethical business practices.
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Gregg Pennington writes articles on a number of topics
including loans, debt and credit. For more information
about finding a loan with bad credit visit:
http://www.onlinemoneysources.net/bad-credit-personal-loans.
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