Getting Loans with Bad Credit is Entirely Possible

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Credit scores feature prominently in determining who gets approved for loans.  These scores range from bad to excellent, and depending upon your number, a lender may or may not approve a loan for you.

People with bad credit scores have a lower likelihood of being approved for loans with competitive interest rates, favorable terms, and variety of options. A bad credit score typically ranges between 300 – 629. Fair credit scores fit snugly between 630 – 689. Good credit scores range between 690 – 719, and excellent credit scores range between 720 – 850.

The Average FICO Score for Different Age Groups

• 660 – Ages 18 – 29
• 679 – Ages 30 – 39
• 692 – Ages 40 – 49
• 714 – Ages 50 – 59
• 748 – Ages 60+

The numbers make sense. The younger you are, the less established your credit history is and the lower your credit score. The older you are, the more established your credit history is and the higher your credit score.

Factors That will Definitely Impact Your Credit Score

It’s important to point out that a low credit score does not automatically disqualify you from being approved for a loan. On the contrary, it provides a unique set of loan options to you. In the old days, lenders would shy away from borrowers with poor credit. They deemed them high-risk.

The nature of the global economy in recent years is such that credit scores are not necessarily an accurate representation of a person’s ability to repay debts. For example, consider the case of somebody who has never applied for credit facilities before and is entering the job market for the first time.

Your credit score is a work in progress. It details multiple facets of your financial well-being, including the length of your credit history, the type of credit that you have applied for (credit cards, lines of credit at stores, student loans, auto loans, mortgage loans), your available credit, your repayment regimen, the number of new accounts you have opened recently, hard credit pulls against your name, and any liens/judgements against you over the years.

How to Approach a Lender if You Have a Bad Credit Score

As a rule, you will find that carefully managed credit will serve you well in life. It is foolhardy to ‘over-indebt’ yourself by maxing out your credit cards, personal loans, business loans, and home loans. Budgets are the single best defense against wanton expenditure. Anyone with a low credit score in need of a loan needn’t necessarily be down in the dumps. A bevy of loan providers now caters to the bad credit market, often with competitive offers in an increasingly saturated market.

One of the most useful resources available to people with poor credit scores is a debt consolidation loan. As its namesake suggests, these bad credit loans consolidate all of your debts (from credit cards, other debts, et cetera) into a single monthly payment. The objective of a debt consolidation loan is clear: provide immediate relief for overwhelming debt at a lower rate of interest, and more favorable repayment terms than the individual debts themselves. This popular option is available through growing numbers of reputable lenders. Have a look for more information about consolidation loans for bad credit.

Some tips to bear in mind when applying for bad credit loans:

• You always have options – don’t despair.
• Always compare bad credit loan offers – don’t sign on the line without reading the T&C.
• Consider all of your options, including personal loans from friends, family, banks, and online lenders.
• Work diligently to pay off your bad credit loan on time, in full as this will actually help you to repair your credit.

Useful Ways to Repair Bad Credit

The great thing about credit scores is that they are not static. Improve your financial habits, and your credit score will improve according. There are many ways of going about repairing bad credit, each of which requires a commitment to positive change. The following guide serves as a framework for repairing bad credit:

• Apply for your free annual credit report to assess all credit-related activity taking place under your social security number. If you spot any anomalies, report them immediately to the credit bureau. The 3 credit agencies – Experian, Equifax, and Transunion offer a complimentary annual credit report to everyone in the US.
• Tackle your high interest debt first. This means you should always focus your repayment efforts on credit card debt. If possible, transfer high outstanding credit card debts to 0% APR credit cards to avoid interest-related charges. Be advised that you will have to pay a percentage fee on the amount of credit card debt you are transferring to the new 0% APR card.
• Set up a budget and start using it as quickly as possible. A budget makes financial sense, since it determines how much you can allocate to individual expense items, necessities, and personal disposable income. If possible, cut back on discretionary spending and plough that money back into debt repayment.
• Bad credit scores are sometimes the result of bad habits. For example, you may not know that regularly applying for store lines of credit – even if paid off on time every month – will affect your credit score. The fewer the number of enquiries, the less damage to your credit score.
• Consider alternatives to traditional bad debt, like bankruptcy and insolvency, debt mitigation, and debt forgiveness. Preserve your credit because you never know when you’re going to need it. A bad credit loan is a viable option which can help you consolidate all your outstanding debt repayments into a single monthly loan repayment at a competitive rate of interest.
• Even if you do nothing but manage your credit card debt, over time your credit score will improve. That’s because one of the key ranking factors is the length of time you have been granted credit facilities. Be prudent in the way you manage your loans, debts, and payments, and your score will improve.