All About Getting a Loan With Bad Credit

If you have a credit score in the low range, then you probably know a thing or two about applying and then getting turned down for loans. The fact that you get turned down so often could also make it much more difficult for you to improve your existing credit because you’re not getting the chance to show lenders that you’re trying to turn your finances around. Because of this, you may have no choice but to suffer the consequences and take out bad credit installment loans. The one good thing about getting a loan with bad credit via this method is that many lenders offering installment loans will report your timely payments to the credit bureaus, which means that you’ll be improving your score over time.

Types of Loans for Bad Credit

There are a few different types of loans you can take out with bad credit. One of the most popular options are credit cards geared toward people who are trying to improve their credit. These types of credit cards are secured — meaning that you’ll have to pay a deposit before you can get the card in the event you don’t pay. However, when you make your payments, they will be reported to the credit bureaus so your score should gradually improve. Bad credit installment loans are another option, and you can get these through several different private lenders. The interest rates will be high, but likely much lower than what you can expect from your third option: payday loans. Getting a loan with bad credit by taking out payday loans should definitely be a last resort because the interest you’ll be charged will likely be higher than what you’ll see anywhere else, and also the industry is shady in general. The FDIC states that payday loans are actually one of the highest risk types of subprime loans available today. Many payday lenders are very untrustworthy and looking for nothing more than to rip you off.

Which Bad Credit Loan Should You Choose?

The type of loan you decide to take out should depend primarily on how much money you need and just how bad your credit score is. If you need a substantial amount of money, like for example a $2500 loan with bad credit, you may be best off to check into bad credit installment loans. Companies offering these tend to be willing to loan out more money, but keep in mind that if your credit is incredibly bad, you may not be able to get approval. If you only need a small amount of money, a credit card might be your best bet. You can either attempt to get a secured one or an unsecured one. The interest rate will be high, but if you pay it off as soon as possible, it will look good on your credit. You can then close out the account and try to get a credit card with a more favorable interest rate. Payday loans are also an option for you if you only need a little bit of money. However, you may not be able to get one depending on where you live because many states have banned them — and with good reason. If you decide to go the payday loan route, be 100 percent certain of what you’re getting into and try to make sure that you have the money to pay the loan back when it comes due so that you don’t have to turn around and borrow more money from the payday lending company. You should avoid getting sucked into the vicious payday loan cycle at all costs.