Do Bad Credit Loans Exist?

Getting approved for a loan is hard enough. Getting approved for a loan with bad credit is even harder. Traditional banks and financing companies are less than willing to lend money to people who have a history of poor credit because they are seen as a risk. Poor credit can be caused by payment defaults, late payments, arrears, and other payment issues. The truth of the matter is there are loans for people with bad credit that are meant especially for people with poor credit.

A bad credit loan is possible even if you have no property or asset to place as collateral. A bad credit loan which involves collateral is known as a secured loan while a loan which does not require collateral is called an unsecured loan.

Before applying for a bad credit loan, you must know exactly why you have bad credit. Bad credit is caused by a variety of reasons so it is important to check your credit report to get all the details. Some lenders may ask you about why you have bad credit so be prepared to give an explanation. Make sure that you are honest about your financial situation to your lender, especially about past financial problems.

More often than not, most people fail to report some monthly bills to the credit bureaus. Examples of monthly bills are rent, utilities, and phone. If you happen to have an excellent history of payment with any of these, then you should request a letter from the company of that account. You can present it to the lender whom you are applying for a bad credit loan. This will increase your chances of loan approval since it shows that you are capable of being responsible financially and can make payments regularly.

Your history of employment is also being considered before you are approved for a bad credit loan. Aside from proving that you are employed, the lender will also check other factors such as the length of time you have been employed at your current job. Lenders are more at ease with approving a loan if they know that you have kept your job for a certain period of time and if they think you are unlikely to move away.