Given the way the market for both commercial and individual lending has evolved over the past few years, the financial picture for people who are recovering from credit problems in their past is looking a lot brighter. If you’re in this boat yourself, you can use top rated bad credit loans to secure some much needed funds. Here are some important factors to consider.
Why Bad Credit Loans Are A Good Thing
Even though a bad credit score can seem like an almost intolerable burden to bear, you’re taking the right course of action by seeking out lenders who are willing to work with individuals in your situation. Top rated bad credit loans, when taken with care and repaid promptly, can help you make significant improvements to your credit score while also giving you access to the money you need.
It’s true that the common factor shared by all bad credit loans — very high interest rates, usually over 20 percent and sometimes as high as 36 percent — is not a particularly attractive one. When compared to predatory lending systems like payday loans or no-credit-check installment loans, these repayment costs begin to look positively benign. Some of the worst of the short-term lenders will charge interest fees that amount to more than 1,000 percent when calculated annually!
Of course, there are some other ways for you to secure credit without resorting to unscrupulous lenders. Take the time to investigate your options thoroughly — both inside and outside the world of bad credit loans — before making any commitments. Conventional lenders often offer specialized forms of loans (e.g. cosigned loans or secured credit) that are available to people with poor credit scores.
Another option you should weigh is postponing your application for any sort of loan for as long as possible. If you can keep your financial situation under control, make regular payments, and avoid any mishaps, your credit score will improve over time. The more time you spend practicing good financial habits, the more favorable your loan terms (from any sort of lender) will be.
Evaluating Bad Credit Loans
Always do your homework when you look at a bad credit lender! Fortunately, the vast majority of companies that offer this service today make their terms and conditions available online. Make sure you gather the same information from each lender you’re considering so that it’s easier to make comparisons. Most loans offered by bad credit lenders are relatively long term (in the two to five year range) when compared to more predatory lending arrangements.
Thanks to the wide variety of lenders operating in this market today, you’ll be able to pick from a variety of companies that may or may not have credit score thresholds. Many lenders set their bar at a score of 600, but industry leader Avant works with individuals whose scores are as low as 580. OneMain, another major bad credit loan provider, doesn’t even set minimum scores.
Regardless of the provider you choose to work with when you take out a bad credit loan, you should make repaying it a very high priority. These loans are useful tools only when you use them as part of a plan to rebuild your credit. When you pay close attention to all of the applicable terms and fulfill all your repayment obligations, you’ll be rewarded with cash in your hand and a nice positive bump in your credit history.