Are there loan options for bad credit borrowers?
Many people think that bankruptcy is the end of the road for them. The truth is, it’s just a new beginning. Yes getting financing over the next few years will be tough, but this is your opportunity to do everything over, and this time, get it right!
If you’re worried about your new low credit score, there are loan options for bad credit and secured credit cards that can help you bounce back and rebuild your credit.
People who have high credit scores and excellent credit history have more options when it comes to choosing credit cards, insurance and loans. Naturally, creditors would prefer to give the best deals for borrowers who have a proven record of repayment. This doesn’t mean that creditors do not give loan options for bad credit borrowers.
The fact is, a large number of consumers do have bad credit and creditors are aware of this. They designed special provisions to accommodate people with poor credit. Guaranteed approval credit cards or bad credit credit cards are especially created for consumers with bad credit. Bad credit loans also cater to people who currently have low credit scores.
Are there disadvantages on getting a bad credit credit card or a bad credit loan?
If you have a poor credit history, creditors deem you as a high-risk borrower.
Some privileges enjoyed by people with outstanding credit will not be available to you. The interest rates imposed on your account will generally be higher than regular credit cards or loans. Creditors also want to make sure that the money they lend will not be lost to defaults, so they may require a security deposit.
Bad credit credit cards may also come with smaller credit limit.
This limitation can actually do you good. While you’re still working on improving your credit score, a lower credit line will help you control your credit card charges. It also minimizes your risk of charging off more than what you can afford to pay on your credit card.
When applying for a bad credit loan, one of your main concerns should be your creditor’s provision for improving your credit.
Make sure that your credit card issuer or your loan lender will regularly report all your payments to the three major credit bureaus. Remember, this is the only way you can boost your credit score and rebuild your credit. Your credit card company should also offer you an upgrade to a regular card if you have consistently proven to be a good payer.
Lastly, just because you have a poor credit rating doesn’t mean you can’t choose the best option.
It is possible to find bad credit credit cards and bad credit loans with reasonable interest rates. If you do your research well, you can find them in the market. When you’ve finally made your decision and submitted your application, see to it that you’ve read and understood all the terms and conditions that you’re signing up for.