Which Loan Should You Take Out in Case of Bad Credit?

Your laptop breaks down, you need a medical treatment, and all of sudden you find your outstanding bills lying on the table. You do not know how you are going to settle these unexpected expenses. You cannot turn to banks because of a poor credit history. You plan to take out payday loans as you can get funds immediately.

Wait! You may settle all your dues with payday loans, but have you thought how you are going to pay back the debt? These loans come with two-week term and carry a high rate of interest. This will cause a huge financial strain and you may end up with rolling over the loan. Therefore, you should take out loans for bad credit that need no guarantor and credit check.

Here is the Credit score and the credit rating:

Credit ScoreRating
300-549Very Poor / Bad Credit
550-629Subprime / Bad Credit
630-679Fair Credit
680-719Good Credit
720-850Excellent Credit

 

You can apply for bad credit loans if your score falls between 550 and 629. Since these loans require neither guarantor nor collateral, you will pay back the debt with high interest. Lenders charge high interest because of your poor credit report.

Poor credit score means you have a history of making defaults, which makes risky for lenders to lend you money. They will doubt on your repayment capacity. To mitigate the risk involved in lending you money, they will charge high interest rates. However, these loans are still affordable than payday loans.

Bad credit installment loans vs. Payday loans

Payday loans are provided generally for two weeks that may extend to one month depending on your next payday. As you put in the application, your account gets loaded with money. You will pay back the whole of the debt with interest immediately as you receive your next salary. You cannot be flexible with your payments. If you fail to pay off, you will end up with rolling over a loan, which means paying additional interest and late payment fees. Chances are you will fall into a debt web.

Bad credit loans also require immediate payment. However, you can ask your lender for installments. Some lenders allow borrowers to avail the facility of payment in installments. You may choose the period of 3 to 12 months to pay off your debt in equal installments. Therefore, these loans are more manageable than payday loans.

What if your credit score is extremely poor?

If your credit score falls between 300 and 549, you will not be eligible for bad credit loans. These scores are granted to borrowers with CCJ. In this situation, you should take out CCJ loans with no guarantor from direct lenders. However, you make sure that your report shows settled CCJ.

You can apply for these loans online. A lender will assess your income statement to ensure that you are able to pay back the debt on time. The lender will turn down your application if they doubt that you will not be able to manage your regular expenses along with the burden of debt.

Not all lenders provide bad credit loans to borrowers with CCJ because it involves extreme risk. A few lenders may disburse funds if you agree to put a security against your loan. Note that the collateral must be worth the equivalent of the borrowed amount. Collateral minimises the risk of the lender and therefore you pay the debt at a lower interest rate. When you take out these loans, make sure that you will pay back the debt on time. Otherwise, you will lose the security.

Now that you may have got to know, which loan will support your finances if you have a bad credit report.

Sum up:

Do you need bad credit loans? Stop worrying because you need neither guarantor nor collateral. Lenders provide these loans without a tedious procedure. A reliable online direct lender has created a policy to heal the situation of borrowers so that they easily apply to CCJ loans through a simple and straightforward application procedure. The direct lenders have a solution for your every situation. It the duty of the borrowers to pick for loans wisely. You can easily apply for a CCJ loan from direct lenders for instant approval.

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