How to Get Bad Credit Loans Approved?
Getting a loan has become very easy. Nowadays banks offer seamless loan application and approval. But for loan approval, one needs to have a good credit score. This applies for every loan you wish to apply. Credit scores are a measure of the financial creditworthiness of an individual. Every banking and financial institution takes into account this parameter before approving the loan.
There is a large section of the society that doesn’t qualify in the slab of good credit score; they have a bad or poor credit score. Under such circumstances, there is a higher probability that their loan application will be rejected. So, is there no possibility for them to get a loan? Well, there are financial institutions that don’t just look into the credit score but consider financial status, the income, place where the person lives, etc. as a mark of the applicant’s creditworthiness. Let’s explore what bad credit loans are and whether it is possible to get a loan on this.
What are Bad Credit Loans?
Bad credit loan is a kind of personal loan that is sanctioned to persons having a weak credit score. Banks, credit unions, online lenders, etc. are some of the people who might grant loans for bad credit. An important point to note here are that these loans come at a higher interest rate and turn out to be expensive. So, it is always advisable to consider the situation before heading towards bad credit loan for personal use.
Bifurcation of good and bad credit score
FICO has subdivided the credit score into various categories which are a reflection of the parameters of a good and bad score. If you are not aware of this, any of the banking institutions will provide you this information. You can also check these scores online.
Tabular representation of credit score:
| Credit Score | Rating |
| 720-850 | Excellent |
| 680-719 | Good |
| 630-679 | Fair |
| 550-629 | Subprime |
| 300-549 | Poor credit |
What are the different types of bad credit loans?
Well, there are many bad credit loan providers, some of the examples of these types of loans include, credit unions, payday loans, etc.
These financial institutions and loan providers will take into account different perspectives like the income, financial status, and others to approve loan and process loan application.
Zeus bad credit loans Bideford is one of the leading loan providers to the people having a poor credit score. They provide payday loans. These loans are one of the leading options for those who are looking for a personal loan when they have an average or low credit score. They are a short-term loan which allows a person to get the fund. The reason these loans are called as the short-term loan is that they have a short-term period for loan repayment. This period varies between a few months to a year. However, you must know that these loans come at a higher interest rate. Payday loans are unsecured loans where one doesn’t need to keep anything as collateral.
Types of personal loan that one can get with bad credit score:
- Secured personal loan
- Unsecured personal loan
Secured Personal Loans
These types of loans require the borrower to put some valuable assets like the home, car, jewelry, etc. as a piece of security. In case of failure to repay the loan, the loan provider has the right to seize the assets.
Companies offering secured personal loans often offer unsecured personal loans as well.
Unsecured Personal Loans
As the name indicates, the unsecured personal loans don’t have any conditions; the borrower doesn’t need to put anything as collateral. The loans for bad credit invite high-interest rate for unsecured loans.
Is payday loan secured or unsecured loan?
Payday loans are secured loan. Although a payday loan doesn’t ask the borrower to keep anything as collateral, the lender asks the borrower to secure the loan with a cheque plus the interest rate. In case of failure of repayment of the loan, the borrower needs to pay a high interest rate.
Conclusion – Bad credit personal loans are similar to other loans; the only difference is that the interest rate may differ. When it comes to uses of this loan amount, one can use a bad credit car loan to buy a car, renovate the house, pay off store bill, or bill of a high-interest credit card. However, an important point to consider while choosing this type of loan is that one must consider aspects like interest rate, repayment period, penalty and other charges and then select the lender.
