A few months back, I required some funds for a personal cause.
I wanted to borrow money from the market. I approached some
lenders and to my horror, I found that I had a bad credit score.
I was in a dilemma. I required funds urgently but due to my
bad credit, no one was too willing to give me the money. Also
I did not have any collateral to place for a loan. It is then;
when I first came across something called unsecured
bad credit loans.
What is a bad
A bad credit tag is usually
attached to you when you make default in your payments. A credit
score is the parameter used to define whether you have a bad
or good credit. It is a numerical figure calculated by financial
organizations by evaluating an individuals performance with
debts. The most popular kinds of credit scores are Transunion
and Experian. A score below 500 is taken to be a bad score by
lenders. On FICCO scale, a credit score of 720 is considered
to be safe for giving loan while a score of 580 and less is
taken as bad credit.
Bad credit loans can
be of two types: Secured bad credit loans and unsecured
bad credit loans. The first one allows you to attach your
property as collateral and in turn, you might manage to get
a lower interest rate on the loan. However, if you are not too
comfortable with attaching any of your assets, then you can
apply for unsecured bad credit loans.
What are Unsecured
Bad Credit Loans:
bad credit loans are loans that are not secured by any
kinds of assets (property or equity). Thus it becomes a very
risky proposition for the lender. If the borrower attaches any
collateral to the loan, the lender is sure to get back the money.
Since the risk factor is high, the interest rates are bound
to be higher for unsecured bad credit loans than it is for normal
loans or maybe even secured bad credit loans.
bad credit loans sure does have a lot of advantages:
bad credit loans provide funds to people who are in dire
needs of funds but are not able to get any loan due to their
unfavorable credit history. It can also be provided to people
who have filed for bankruptcy.
bad credit loans can be used for whatever purpose the borrower
thinks fit. It can be for wedding or educational purposes as
well as for paying off bad debts. Also there is no limit on
the amount that can be borrowed. It will depend on how much
the lenders are willing to lend you.
Unsecured bad credit loans helps people with bad credit history
to improve on their credit
score by paying the installment dues in time. This way they
can avail the best loan offers the next time.
The rate of interest
for unsecured bad credit loans depends on various factors. The
basic is credit score of the borrower. The lower the score,
the higher the interest rate, as the risk involved is higher.
The second factor is
the monthly income of the borrower. The rate of interest will
depend on its stability.
The last but
not the least factor is the loan amount:
The most appropriate
thing to do is to procure the quotes from several lenders and
then decide on the best option depending on the interest rates,
payback tenure and so on.
Bad Credit Loans
Ample lenders willing
to give unsecured bad credit loans today flood the market. But
for a fast and less hassled unsecured
bad credit loans, online lenders are the best. The invention
of Internet is a boon to the finance sector. It has a mutual
advantage. You can surf through various websites and research
the available moneylenders before you make a choice. You can
apply for a loan on the net itself.
Online lenders have an
advantage over traditional lenders. You can apply for unsecured
bad credit loans in the comfort of your house.
Here is the process
of applying for unsecured bad credit loans online:
You will require filling
out an application form. Mostly it will be available at their
website. You might require creating an account. For that you
will be given an unique user name and password.
After you submit your
application form, the lender will review your case and get back
to you. They might call you or send you an email asking for
more information. Whatever the case , they will be pretty fast
in responding as the market has become very competitive.
Once this process is
completed, the lender will send a representative to you for
the relevant paperwork. You need to provide suitable documents
and lo and behold, your unsecured bad credit loans are approved,
in three easy and fast steps.
of Unsecured bad credit loans
Unsecured bad credit
loans have got various advantages. But it also has its flip
side. Now it is up to you to decide whether you can afford to
overlook the following disadvantages.
• Usually the lenders
are aware that the borrower is in dire straits and need the
loan urgently. Thus it is easy for them to take advantage of
the situation by charging a very high rate of interest. Now
this might bring the borrower back to square one. It might lead
to default in payments and thus further reduce his credit score.
• Another disadvantage
of for unsecured bad credit loans can be that the lender can
offer shorter repayment tenure. He might do this to recover
his loan amount. But this can put the borrower in the same situation
from where he started, as mentioned above, resulting in a lower
Unsecured bad credit loans can prove to be a very powerful instrument
to enhance credit rating if properly used. You must not jump
at the first offer you get. A little research can go a long
way in saving a lot of money for you.
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