Bad credit reports and low credit scores are often due to short or non-existent credit history. They can also be the result of late payments or excessive debt.
About 16% of Americans have a FICO score of 300-579 or have poor credit. Another 18% have fair credit, meaning a FICO score of 580-699. A perfect FICO score is 850; only 1.2% of Americans achieve that level.
Knowing how to get a quick loan with bad credit can help you through times of financial difficulty. Learn about the types of loans available and how to secure a personal loan with a low to fair credit score.
Securing a loan begins with knowing where your credit stands. Check your credit score and credit reports using a free online service such as Credit Karma. Sign up to receive email updates about your credit score.
The three major credit reporting bureaus, TransUnion, Equifax, and Experian, must provide you with a free report upon request every twelve months. You may also request a free report from the bureau a lender uses when denying you credit.
Once you receive your report, review it carefully to ensure accuracy. If there are any mistakes, file a request for a correction. If there is a negative comment, you can submit a note of explanation and request its inclusion in the report.
Check with several lenders to learn about options and fees, including interest rates, length of the loan, and if there are prepayment penalties. Some lenders offer low-interest rates but charge exorbitant fees.
You avoid paying some of the interest when you pay a loan early. If there is an early pay-off penalty, that allows the lender to recapture the interest you are attempting to avoid.
Prequalification gives you an idea of the maximum loan you will qualify for. Pre-approvals are usually done using a soft credit inquiry.
A soft credit check is when a financial company verifies your credit as part of a background check. This may happen when a credit card company wants to send you an offer. Soft inquiries do not impact your credit score.
When you file a loan application, the lender will perform a hard credit check. This is done when a financial institution verifies your credit to decide whether or not to extend credit.
This type of inquiry has a negative impact on your score and will usually remain on your credit report for about two years. Only file a loan application with one lender to reduce the number of hard inquiries on your credit.
Avoid applying for numerous credit cards. Each application results in a hard inquiry. A lender seeing numerous inquiries by credit card companies may consider you a high-risk borrower in need of cash and racking up debt.
If you have bad credit, securing a loan and defaulting will further harm your credit. In addition to understanding how to get a loan with bad credit, you must manage repayment. You can take steps to incorporate a quick loan into your monthly budget.
Consider making the following changes to ease your monthly budget:
When you add up the cost of items you use regularly, you may be surprised at how much money flows out of your wallet like water.
Ensure you understand the loan’s length, the monthly payment amount, and the payment due date.
Loan terms you need to know:
Understanding the above terminology means no surprises when signing your loan agreement.
If you have bad credit, consider applying for an online loan. Some credible online lenders do not require a credit score to obtain fast cash.
These lenders specialize in high-risk loans. You will likely pay a higher interest rate, but you can improve your credit score by making timely payments.
Even with bad credit, you can secure several types of loans online and get the cash fast. This includes:
Emergency loans cover unexpected expenses. They are available quickly, with same-day or one-business-day delivery to your bank account.
This type of personal loan is easy to obtain online. It will provide you with a monthly payment plan at a fixed interest rate.
Using a credit card to obtain cash is fast, but interest rates are usually 25-27% or higher. There is no grace period before interest begins accruing.
The card also charges a 3-5% fee for the advance. The amount you can borrow is up to your credit card limit.
Unsecured personal loans are available online with no collateral requirement. Collateral is an asset, such as a car or home, the lender will take if you default on the loan.
Interest rates are usually higher than with a secured loan. This is an excellent option if you don’t have or want to use collateral.
This loan has a brief repayment period, usually your next paycheck. The interest is high, and payment must be completed in one lump payment. The maximum loan amount is usually $500 or less.
To repay your loan, you must write a post-dated check for the entire loan balance, including fees. The alternative is authorizing the lender to withdraw the funds from your bank account electronically.
A typical two-week payday loan will have a fee ranging between $10 to $30 for every $100 you borrow. This is the equivalent of an annual percentage rate of 400%.
Loans for bad credit require many of the same documents as a standard loan. You must provide your personal contact information, including your legal name, address, and phone number. You must furnish your social security number, driver’s license, or other legal identification.
The lender will require recent bank statements and proof of income, such as W-2 forms and federal tax returns. Some lenders will request a copy of utility bills and a rent or mortgage statement to verify your address.
If you are wondering how to get a quick loan with bad credit, contact Fast Loan Direct. Complete a quick and easy online application, and we will provide you with the best lender to fit your needs.
Once you receive approval, funds will be deposited into your account the next business day. Complete our online application today.