Bad credit personal loans are offered to people in need of financial assistance but cannot qualify for regular loans because they did not meet the required credit score. Are you in the same situation?

It is a relief to know that there are lending companies willing to extend financing to the bad credit market. Yes, you can turn to bad credit lenders for help in case you need to take out a loan for an emergency.

Secured and Unsecured Loans for Bad Credit

Loans for bad credit can either be secured or unsecured. For instance, if you are a homeowner, you can use your home as collateral for your debts to get a lower rate. Secured bad credit loans generally carry lower interest rates because they are guaranteed with the borrower’s property. Thus, in case of default the lender can use the submitted collateral to pay the rest of the debts.

What about unsecured bad credit loans? Because no collateral is required for this type of bad credit loan, lenders impose a higher rate of interest to make up for the risk. However, for borrowers who do not own properties which can be used as collateral, an unsecured bad credit loan is a welcome option.

Bad Credit Loans and Rates

Typically, personal loans for bad credit are expected to carry higher rates than standard loans. Nevertheless, this does not mean you should settle for loans with unreasonable terms and conditions. Just because you have bad credit or poor credit score does not mean you should be treated with less dignity by lenders. To avoid predatory lenders who may try to take advantage of your situation, you should spend time doing research and comparison.

Is it possible to get a good rate despite having bad credit? Indeed, it is. First, check your credit report so you’ll know exactly what your credit score is. Some lenders may tell you that you have a lower credit score than what is in your report. Thus, checking your credit score before applying for a bad credit loan will protect you from such lenders.

If you discover errors in your credit report, do not hesitate to correct them right away by sending a dispute letter to the bureau that issued your report. You may need to wait for up to thirty days for the bureau to complete its investigation and correct the errors in your report. However, having those errors corrected can enable you to instantly increase your credit score. Raising your credit score by even just a few points can win you a better rate of interest on your loan.

When looking for a bad credit personal loan, make sure that you are dealing with a legitimate lending company. Do not sign up for the first offer. Even if you have bad credit, it is still worth the effort to ask a potential lender for a lower rate of interest than the initial offer. Do not rush in making a choice. Spend time and compare at least three potential bad credit loan lenders. Once you are sure that you’ve found the best deal, that’s the time you should submit your application.