If you have been exponentially worried about your bad credit and not getting qualified for loans, it is time to stop. You cannot only get money if you have a poor financial history but may even improve your score if you can get a suitable offer.
What is Bad Credit?
It is easy to say that a bad credit score is a history of not paying or paying late of debt. However, a report could also include bankruptcy records and collection accounts.
On the other hand, it could be difficult to identify what actually makes a credit report poor. The reason is that different lenders view reports varyingly. One lender may be willing to provide loans to a borrower that the other rejected no matter
There are also situations where a borrower has no financial history at all. This could be their first time borrowing. It means that the lender has no criteria (bad or good) to judge their ability to pay back.
Improving Your Credit Score
If you have been rejected frequently on the basis of bad credit; typical with bank loans, then you must be looking for ways to improve it. Building a score is not an easy task; especially from scratch. Of course, there are plenty of methods to do so but they can be costly.
Instead of seeking ways to improve your score when you are in urgent need of money, you should rather choose loans for people with bad credit. Many online direct lenders are willing to help you and even provide flexible payment schedules. Once your money situation is a bit better, you can go back to improving the score.
Cost of Loans
While you have the option of acquiring loans for people with bad credit, it does come at a cost. This cost is typically in the form of higher interest. Consider the following example.
Suppose that you need some money to get your car repaired. You are seeking a loan of at least 2,500 dollars. For a good score, you can get the money payable over 3 years with an interest rate of 9.33 percent and a monthly payment of 79.88 dollars. This means that you will pay 375.82 dollars in interest over 3 years.
For a similar situation, if you have a low credit score, you will get approved for an interest rate of 35.89 percent. Your monthly payment will be 114.35 dollars but you will pay 1,616.70 over the 3 years. This means that with a bad credit score, you ended up paying 1,240.88 dollars more in interest.
On the other hand, you can adjust the flexibility of paying the extra cost by choosing a longer payment schedule. But you should remember that the longer you take to pay, the more interest there will be. Therefore, you need to find a balance; a plan that suits your ability to pay back without overburdening.
Where to Find a Direct Lender?
If you want the convenience, then choose online direct lenders. Run a simple Google search for bad credit and you will find many. You can also consult lender directories. You put in a few details and the directory will return a list of lenders that match your criteria.
Before selecting a lender, do a thorough research on them. Through their website, learn as much about the company as possible. This will reduce your risk of becoming a victim of a scam or getting lured into paying hidden charges. Also, choose a lender that reports to a credit bureau so you can improve your score.