1. Loans for People with Bad Credit
Is it possible for people with Bad Credit to get loans in their name? You’d think not,
wouldn’t you? After all, people with bad credit have a history of not paying off previous
loans which makes them bad credit risks – right? They’ve gotten into trouble with credit
before and there’s no place out there that will loan them money with a bad credit history
– right? Well, that’s partially right.
Actually, it is possible for people with bad credit to get a loan. They might not be able to
always get it on their own, but there are options available to those with bad credit. The
terms may not be attractive, and it certainly might not be easy, but it is possible.
The first – and probably most viable option – for people with bad credit to obtain a loan
is to find a co-signer for the loan. The co-signer must be a person with a clean credit
history. Basically, when a co-signer secures a loan, you both appear on the loan as
responsible parties. The co-signer is essentially telling the lending company that they
will make sure you make your payments and if you don’t, they will.
Having a co-signer on a loan is tricky business, however. Usually a co-signer is a
parent, loved one, or close friend. If anything goes wrong, the relationship between the
two of you could go horribly sour, so if you are asking someone to co-sign on a loan
with you, you should either be sure you can make your payments or risk damaging the
relationship you have with them.
People with bad credit might also be able to secure a loan in their name from a lending
company, but they are most likely going to have to pay a higher interest rate than those
who have good credit. For example, a car loan for a person with good credit can be
obtained with a loan that has a financing rate as low as 4 percent in some cases. A
person with bad credit might pay up to 12 percent for the same loan. As you can
imagine, that means higher payments on the loan for the person with bad credit.
A secured loan is another option for people with bad credit. Essentially, a secured loan
uses the property you are borrowing for as collateral against the loan. If you don’t make
the payments, the property is repossessed. Secured loans for people with bad credit are
generally given for a vehicle which means that non-payment means the car goes bye-
bye.
The good news is that if people with bad credit are able to secure a loan, they can
rebuild their credit with timely payments and non-default. That puts them on the road
toward financial stability and a favorable credit report.
Troy Easley is a credit restoration expert with MyCityCredit.com. MyCityCredit.com
specializing in credit restoration and boosting credit scores. You can find him on the
web at MyCityCreditBlog.com