There are millions who have bad or poor credit scores and less-than-attractive credit files. There are millions of people who have bad credit, and many reasons that they their credit has gotten in the shape it is in today. For some, an illness or injury may have resulted in job loss; others may have just went through divorce or have been laid off from their job unexpectedly, and still others have made mistakes in the past by not paying their bills on time. Whatever the reason, you can bounce back from a bad credit history and build up your credit file regardless of what the numbers look like right now. Yes, you can get a fresh start!
In fact, many creditors welcome bad credit borrowers. They realize that there is an entire sector of the population that can be helped by offering a second chance to those who have learned from their mistakes.
When applying for a bad credit loan, it is important to know there are limits. Most bad credit loans are just test loans that creditors use to give you a chance to show them that you are credit worthy. By taking out a bad credit loan and fulfilling your obligations by paying it off on time, and in full, you are demonstrating your new-found ability to handle financial matters. This will lead to the probability of being able to establish yourself for loans in greater amounts that are less expensive because they have lower interest rates. Yes, bad credit loans are the best first step to rebuild your damaged credit.
Where Do I Start?
There are many wonderful online lenders who specialize in financing products for those with lower credit scores. You may be asked to fill out a simple online application, provide some documentation (generally via fax or email) to prove your identity and sign some loan documents. One great advantage to using an online lending institution is the convenience of doing everything from the comfort of your own home – without the stern banker’s discerning glare as you try to get money from a traditional lender.
What types of loans can I get?
The two best types of loans to get that can help you rebuild you credit are a bad credit personal loan and/or a bad credit automobile loan. Both of these types of loans are great ways to add points to your FICO score.
Bad Credit Personal Loan
A bad credit personal loan can be for any purpose – home improvement or remodeling, travel, education, or basically any other personal need. Most lenders do not ask what you will be using your personal loan for. You may qualify for these types of loans without a co-signer, but you stand a greater chance of getting approved for a bad credit personal loan if you do have a co-signer with good credit who will stand behind you and agree to pay the loan if you default. A co-signer can be a relative, friend, or anyone else who trusts you enough to believe that you will repay the loan. There are many lending institutions, also, that will release your co-signer from any obligation after you have made a certain number of payments on your bad credit personal loan – which makes the offer more appealing to someone who might not want to sign with you for a long duration.
Bad Credit Auto Loans
A bad credit auto loan is a wonderful way to help rebuild your credit score – not to mention being a great alternative to predatory buy here, pay here automobile dealers who charge sometimes as much as 300% markups on used vehicles. A bad credit auto loan can be obtained fairly easily because the lender will be holding equity in the vehicle by placing a lien on it until you have paid in full. Most bad credit auto loans have fairly reasonable interest rates with payment that fit your budget.