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There are many reasons why you may have found it difficult to get credit in the past, be it due to a lack of income, living in an eligible state or not having collateral to meet the requirements of a secured loan.
However, one of the most common factors that can prevent people from accessing the very best loan rates is available is usually due to their credit history.
Let’s take a closer look at how poor credit loans work, how much they cost and what you can do to ensure you get the best rate possible with Credit Raters today.
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How Does My Credit Score Work?
Let’s start with the basics.
Your credit history is a record of your entire borrowing background. It’s made up of a huge range of factors from when you’ve had or applied for credit in your lifetime. Some of the logs on your credit score include:
- When you’ve applied for credit
- When you’ve repaid credit
- Defaults
- Checking account history
- Some residential history and identity confirmation
All of this information is used to calculate a number reflective of your borrowing history with each credit reference agency using their own mathematical wizardry to produce your overall score.
This credit history can then be used by lenders to quickly work out whether good or poor credit loans are likely to be best for your circumstances.
I’ve Got No Credit History. How Will That Affect My Loan Application?
Having no credit history can put some borrowers at a disadvantage depending on the type of credit you’re looking to apply for.
Whilst it could be said that since you’ve never needed to borrow money you’re able to manage your finances well, you are an unknown quantity in the eyes of lender which puts you at a higher lending risk.
If this is the case then there’s definitely no need to panic. You’ll be able to start by applying for loans for those with no credit history and gradually build up a positive score as you make timely repayments.
Once this has been fully repaid, this will leave a mark on your file and increase your credit score, giving you access to a wider selection of loan products at better rates in the future. Other products such as credit builder credit cards can also be a useful way to quickly build up your score.
How Does My Credit Score Affect My Loan Application?
Whenever you apply for a personal loan your lender will take into account a range of factors to determine whether the loan is affordable for your circumstances and that you meet their eligibility requirements.
Some of the most common metrics used include:
- Your state of residency
- Your income
- Your employment status
- Your credit score
We’ve already looked at how your credit score is calculated and lenders will use this to give them an accurate idea of your ability to manage credit along with any existing loans that you’ve already got outstanding.
Whilst having a great credit score is, of course, an advantage, many lenders will only use this information as part of their overall assessment rather than basing their entire decision on it.
The most important factor for any lender is that you can safely and comfortably afford to borrow the loan without putting yourself in financial hardship.
What Loans For Poor Credit Are Available?
At Credit Raters, we understand that there will always be times when a financial helping hand could quickly remedy an emergency situation. Just because you’ve had issues with credit before, that shouldn’t exclude you from the privilege of having fast access to funds.
We work with hundreds of lenders who are sympathetic towards applicants with a less than perfect credit history or with no credit history at all. Here are some of the different loans for poor credit are available.
Payday Loans
No matter what your credit history, payday loans have a fantastic reputation thanks to their high acceptance rates and speedy payouts. As long as you can afford to repay the amount you borrow on your next payday, we’re confident that we’ll be able to help you to find a lender that can provide you with the funds you need.
Instalment Loans
As with payday loans, bad credit instalment loans can help you to overcome any financial shortfall by offering you credit which is repaid over a few months rather than in one go. Some providers are even able to arrange for funds to be transferred to you on the same day you apply, even if you’ve got a poor credit history.
Bad Credit Personal Loans
Personal loans are available from single monthly repayments through to 12-24 month payback periods. These flexible loans can be used for almost any personal expense and can offer higher borrowing amounts than payday loans.
Remember, the more you borrow, the higher the risk so you may find it harder to successfully apply for larger credit limits initially. However, keep up with your repayments on a bad credit loan and you’ll see a big improvement in your score in no time.
| Loan Type | Typical Borrowing Limits | Typical Loan Terms | Example Interest Rates |
| Payday Loans For Poor Credit | $100 – $500 | 1 month | 165% |
| Bad Credit Instalment Loans | $100 – $1,000 | 2-6 months | 99% |
| Personal Loans For Poor Credit | $100 – $2,000 | 3 – 24 months | 65% |
Am I Eligible For Poor Credit Loans?
No matter what your credit history, every lender in the US will insist that you fulfill some basic qualifying criteria. This is to ensure that you are legally able to take on credit and will meet the minimum requirements in terms of employment and residency.
This basic eligibility criteria includes:
- Being at least 18 years of age when you apply
- Being a permanent US resident in a state that supports the loan type you wish to apply for
- Having a US checking account in your name so funds can be deposited and repayments made
- Being in permanent employment and able to comfortably afford your repayments
Depending on the lender and the information you’re able to provide in your application, you may also be required to present confirmation of identity and/or earnings. By having documentation to hand such as your passport, drivers licence, payslips, social security number, and bank statements, this can help to significantly speed up the application process.
Can I Apply For Loans Without Credit Checks?
Yes! Although you’ll need to apply for a specialist type of loan, such as a guarantor loan, which won’t take your own credit history into account.
Lenders have a legal responsibility to make sure that any money they issue to customers is affordable and can be comfortably repaid. Credit checks are an essential resource in helping lenders to view an instant snapshot of your credit history, allowing them to offer instant online decisions that have made them so popular.
Let’s take a closer look at how guarantor loans without credit checks work.
Guarantor Loans
If you don’t feel that you’re able to get a bad credit loan due to your credit history then a guarantor loan may well be the answer. Rather than basing the success or failure on your own credit score, you’ll be able to ask someone you know to stand in and act as a guarantor should you ever be unable to fulfill your repayments.
What’s more is that by keeping up with your loan payments each month, you’ll actually improve your own credit score for future borrowing giving you access to better loan rates in the future.
Applying For Loans With Poor Credit
If you’re already got less than ideal credit score then the most important first step is to make sure that we avoid making it any worse by applying to the right lender.
Simply use Credit Raters to generated a bespoke comparison of suitable lenders from across the US market. From here, you’ll be able to compare interest rates, loan repayment amounts, and credit limits whilst researching each lender to ensure that they can cater to those with poor or no credit.
Once you’ve found a lender that’s right for you, it’s time to complete your application with some additional information about you, your job, the purpose of the loan and your income.
You’ll also need to provide your checking account information so that the loan can be transferred to you as soon as you’re accepted and repayments can be arranged from the correct account.
You may also need to provide your social security number and/or identity verification documents before a final decision is given.
Once approved, your loan for poor credit could be with you in as little as 24 hours leaving you to focus on resolving whatever emergency life has thrown your way.
So what are you waiting for? Get a free, no-obligation comparison for bad credit loans with Credit Raters today.