Bad Credit Loans- Here’s Why You Pay More

Overview

Bad credit loans are offered by specialist micro lending institutions.

Having a bad credit can be a result of a range of factors. Maybe you lost your job and could no longer afford to pay for some of your credit cards or maybe you have never had any form of credit at all.

What this means is that you’ll probably face an uphill battle when you want to apply for a loan or access some form of credit.

While banking institutions are not willing to provide loans to individuals with bad credit, there are micro lenders that are willing to offer loans to individuals with less-than-perfect credit scores.

The reality is that lenders use credit records to assess the risk of lending you money. If your credit report shows that you have not managed your accounts well or have missed payments, your credit score will be adversely affected.

Lenders will consider you to be a high credit risk and the interest you pay tends to be higher as a result. This is to off-set the risk of approving your credit despite the potential risks.

Tips for applying for bad credit loans:

When applying for bad credit loans, you need to be permanently employed. Credit providers want to see that you have been in permanent employment for at least 6 months and that you are earning enough money to be able to afford to repay the loan comfortably.

It’s important to compare as many different loans as possible before applying. Equally as important is making sure that you only apply to registered credit providers and legitimate bad credit loan providers.

You also need to check all of the information on your credit report – check for accuracy and that there are no mistakes.