When lenders assess risk, they do so based on a number of factors, and your credit score and past credit behaviour are very important. When your credit rating is high, your score in the 700s, the last thing on your mind when applying for a loan is whether or not you’ll be approved. However, when you have credit close to or over its limit, missed or late payments, or too many inquiries on your report, this can equal a not so high credit score. When you need to get approved for a loan with bad credit hanging over your head, this can result in a helpless feeling.
Perhaps you are weighing your options, and although few, there seem to be some. Just be careful. When your credit goes south, you become very vulnerable and the wrong choice can cost you.
Available options one might choose include payday loans, unsecured loans or secured loans. Here is a breakdown of each and why not all are created equal.
We will start with the worst option: payday loans. When it comes to those loans, proceed with extreme caution – or avoid them altogether if possible! Payday loans are popular because they are easy to get, and you receive the money almost right away, which makes them convenient. However, the fees on payday loans, no matter the company you choose, are sky high, and the turnaround time is so short as to be almost impossible to meet. They also don’t report to your credit report, which for some may seem like a bonus, but if you are trying to rebuild credit, they have no value whatsoever.
Another option, far better than payday loans, is an unsecured loan. If you have no assets to leverage as collateral, such as a vehicle or home equity, an unsecured loan may be the way to go. The good thing is, these do report to the credit report, and if paid on time each month, can really contribute to re-establishing positive credit behaviour. The downside though, if your credit is not great, is that interest will likely be high.
The best option to consider when it comes to getting a loan with bad credit is a secured loan. This is because they are less expensive (lower interest) and they report to your credit report. These use a vehicle or home as collateral. Additionally, if you have solid equity in the case of a home, often no mortgage is registered and no appraisal is required.
If you are looking to get approved for a loan with bad credit, Prudent Financial can help. We provide funding to those in consumer proposals and even undischarged bankrupts.
Call us today at 1-888-852-7647.