Bad Credit Loans
Having a poor credit score is not desirable for anyone as it affects the ability to get credit lines. The situation is even worse for people who are in massive debt.
Luckily, First US Financials is here to help! A solution to reduce the burden of the payments can be through debt consolidation for bad credit loans. You get one loan in high volume to cover all your debts. As a result, you only make one payment per month with lower interest!
If you have poor credit performance, there are considerable difficulties in getting loans. In the best case, you can receive bad credit loans. Yet, it also has its disadvantages. Continue reading to find out more about bad loans, and what other options debtors like you can have.
Bad Credit Loans
When banks and other organizations provide credits, they check the credit history of the people. A credit score shows how reliable a person is and how likely it is that he/she will meet the obligations. If you haven’t fulfilled your obligations, such as delaying payments, you will get a low credit score. In this case, when you apply for a new credit line, there is a high chance that your application will be rejected. However, bad credit loans are more achievable for people who have poor credit performance. In general, these loans have a high approval rate, which indicates that eligibility criteria for them are not demanding.
Two Types of Loans
Similar to other loans, bad credit loans have two types, secured and unsecured. In the first one, there exists a requirement to have collateral. Collateral is a valuable asset, such as a house, car, or other property. It hedges the risk of creditors in case you do not pay back the debt. In this case, they liquidate the collateral to get their money. As the borrower takes more burden, the interest rates are a little lower than the unsecured loan.
The second type of loan does not require collateral. Sometimes, borrowers need to have a cosigner to be eligible. Co-signer is a reliable person, usually a friend or family person, with a good credit standing. As they guarantee the payment, if a debtor does not pay back, the co-signer will take responsibility. Again, the risk of non-payment decreases, which leads to better terms in bad credit loans. However, if there is no cosigner and collateral, the loan has an extreme risk for the creditor. Debtors have less to lose. Hence, they might decide not to follow their obligations. Therefore, creditors protect their positions by offering higher interest rates.