Is It Possible To Get A Loan With Bad Credit Record?
The bad financial decisions start since we are young. We do not learn to save or how to manage our money. Young people spend as much as they earn. They get in debt as soon as they get their first job. Before they realize, they are in a terrible position. The good news is that it is possible to change this situation. If you have a bad credit record, you can improve it. In the meanwhile, you may be wondering if you could get a loan. The answer is yes. There are different types of loans you could get.
Why Do I Have Bad Credit?
The credit record is the behavior of a person when they start a transaction. It shows if the person paid on time or fail to do it. If the person takes one extra day to pay, it will reflected on their credit record. Credit cards and loans affect the credit record Any negative behavior leaves a mark. People do not understand how important a positive credit record is. They fail to fulfill their duties. As a result, people cannot get loans or people refuse to offer them services. If you are careless with your finances and are in debt, your credit record will reflect it. It is not impossible to recover your credit record but it will take years.
How To Improve Bad Credit Record
Before you commit to paying a loan, it is necessary to improve your situation. Or at least have a plan to do it. The fact that you cannot get a loan is not the problem. The condition of your finances is the real issue. Improving your credit record should be a priority. It is never too late to improve it. Keep in mind that it will take time. Having a good credit record will open many doors for you. Banks will feel more inclined to do business with you. Think about the future, having a bad record is a problem now. Imagine how bad it will be in the future. Landlords could refuse to rent you a place because of a bad credit record.
What Kind Of Loan Can I Get With Bad Credit?
You have a bad credit record, you cannot change that overnight. Suddenly, there is an emergency. There are loans for bad credit available. Based on your needs and payment capacities, you could get a payday loan or a personal loan. Each option has its benefits. Make sure to learn about each type of loan before applying. The terms and conditions may change with every lender.
These are quick loans for bad credit. In every city in the United States you can find a loan store. These stores lend money to clients that need a little help to make ends meet. The loans are not for a high amount of money since it is based on your paycheck. Federal laws establish that a lender can charge interest up to 40% of the loan. Also, regulations do not allow the same person to take multiple loans at once. Clients must repay in 7, 14 or 21 days depending on the agreement. If the person fails to pay, the interest keep accumulating until they repay. Some stores ask for a pre-dated check as a collateral. The requirements to get a payday loan are:
- An active checking account
- Proof of a steady income
- Valid identification
- The client should be at least 18 years old
Payday loans for bad credit should be an emergency measure. Do not make a habit of taking these kind of loans.
Some banks offer personal loans for bad credit. The amounts are lower and the client must fulfill several requirements. However, personal loans tend to be more flexible than regular loans. There are two types of personal loans:
- Secured Loans: a loan is secured when the client owns an asset. They can use it as collateral. The bank will hold the title to the asset until the client pay its debt. If they fail to do it, the bank will keep the asset. Loan stores also offer personal loans. The terms and conditions could be different. A client could get a personal loan with bad credit. As long as they have an asset, of course.
- Unsecured Loans:
These are harder to obtain and not an option for people with bad credit. The lender must trust the client’s word. They do not have proof that the client can repay the debt.
The interest are higher and the client must pay back after a short period of time.
Payday Loans Vs Personal Loans
What kind of loan for bad credit should you choose? It will depend on your needs. Payday loans are good for emergencies. For those occasions when you need quick cash to solve a problem. The amounts are low and based on your paycheck. Personal loans have more requirements but will also be for a higher amount. If you need to pay a medical bill or something similar, personal loan is the best option. No matter what kind of loan for bad credit you decide to get. You must be sure you can pay back. Otherwise, your credit record will end up looking worse.