Many of you may not have good credit score, which is very essential when you apply for any kind of traditional loans from bank or any other financial institution. However, you can get bad credit loan, so that you will have some money in your possession in order to deal with your outstanding payments.
Let us now try to understand what these bad credit loans are? In the above we have given a simple definition of this loan, that you can get if your credit report is not good. Credit score is the number that will decide how much credit worthy are you. If your credit score is poor then your lender will think that it will be difficult to get his money back, and avoid to offer any loan to you. Bad credit loan is offered as a line of credit to some one who has bad credit score, so that he can meet all his immediate financial obligations.
What are the advantages of bad credit loan?
Following are few important benefits of such loans.
- No need to worry about your credit score/history
This is very good news for them who are not able to get loan due to their past history about their credit score. Lenders who offer such loans are more concerned about your future however they will make sure that you are capable of paying back the loan. Any conventional lender will not bother to check your increase in current income or if you are financially sound to return your money.
- You will get very quick approval
If the lender is reasonably convinced about your repaying capacity then they will not bother about your past credit history but approve your loan quickly. As per statistics, 80 to 90 percent of applications are approved.
- Opportunity to improve your credit score
Now you have got the opportunity to make impact in your credit score by making timely payment of the loan. This will impact positively in your credit score and your credit worthiness will improve.
- Can borrow large amounts of money
You can get large amount however you have to pay more interest too.
- Interest rates are pretty high
Your loan will draw much higher rate of interest as compared to any other loans.
- May be trapped by bad lender
Any crook lender may take advantage of your situation and hence you need to be very careful.
- May get into debt trap
If you do not maintain your fiscal discipline then you may accumulate further debt which will be put you in tight position.