Very Bad Credit Loans

If you are in need of a loan but have bad credit history, you are in a tough spot. Unsurprisingly, people with poor credit or no credit history are considered high risk for any loans. There are personal loans available to those who find themselves in this situation, but they come at much higher interest rates. Such loans are often called ‘bad credit loans’ and are meant to help a person who has experienced bankruptcy, repossessions, or foreclosure to obtain the financial assistance they are denied elsewhere. The more generous creditworthiness requirements make these the ideal loans for bad credit history. If you have bad credit and need a loan, it it possible to get a loan even with bad credit. Banks will loan money to people with bad credit, but as with anything in life, it is not necessarily a cheap way to borrow money.

Types of Bad Credit Bank Loans

There are two types of bad credit loans: secured and unsecured. A secured bad credit loan is simply a loan given by the lender to a borrower with a very poor credit score. To ensure the lending party is protected, the loan is secured by an asset owned by the borrower. Something of value is used as collateral to secure the loan. If the borrower defaults, the lender is entitled to take ownership of the collateral.

An unsecured bad credit loan on the other hand, is a type of bad credit loan financing wherein the borrower is granted credit without any collateral as a safety net. Naturally such a loan is a great risk for the lender, who knows that the borrower has not proven himself reliable at making loan repayments. Obtaining an unsecured bad credit loan is very difficult. Some companies exclusively deal with bad credit loans and borrowers with bad credit history. The catch is that the interest rate is very high and usually for a short amortization period.

When seeking these types of loans you must also be extremely cautious of scams. Any lender that seems overly willing to give credit without collateral or a credit check is suspicious. If the lending party asks you to send an initial payment or phone a 1-900 number, it is likely a scam. As with any personal loan that is qualified as a bad credit loan, the full amount and interest needs to be paid back in a timely manner. Often you can work with the lender to make payments in accordance with your regular paydays.

Benefits of Bad Credit Loans

If you are approved to get a bad credit loan, you will have the chance to repair your damaged credit history by making regular on-time payments. If you look at your bad credit loan as your chance to improve your credit history and your personal spending habits, then you are in the right mindset. You can build financial accountability if you act responsibly now. Remember that repairing bad credit is a long and committed process. Use your bad credit loan as a learning experience and as a time for financial self-improvement.