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What is a bad credit loan?
What types of bad credit loans are there?
How do I know if I have bad credit?
We all fall on hard times and make bad financial decisions and sadly those bad decisions can follow us around for a long time. One of those times when it is most devastating is when we are looking to take out a loan. If you suffer from a bad credit rating lenders are less likely to lend you money, and it can be almost impossible to get credit for buying a home or a car.
That is why lenders have a variety of bad credit loans available for borrowers who suffer from a poor credit history.
A bad credit loan will offer you credit but charge you a higher interest rate and usually offer you a much lower amount than otherwise available. This is done to insulate the lender from the increased risk that you might not be able to pay back the debt.
Once you have a bad credit loan, however, you can use it to start rebuilding you credit history. Top
There are two main types a secured loan and an unsecured loan.
- Bad credit secured loans, usually involve a possession of significant value, most likely your house, as collateral for the loan. The loan size is determined by the value of the possession, monthly income and past history. For a person with bad credit this is the easiest type of loan to obtain due to the increased security a lender has in the value of your possessions.
- Bad credit unsecured loans, are notoriously difficult to obtain because of the high risk a lender would be taking on. As such they usually come with much higher interest rates and much shorter terms. Top
You may have bad credit history if you have had any trouble with repaying your creditors or even if you have never used credit before and have no credit history
Any defaults, arrears, CCJ's, IVA's or bankruptcy claims will also flag you as having a bad credit history. Top
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