Recently, I decided I needed a personal loan to prepare for some upcoming expenses. I were unaware of the fact that I had bad credit until I sat down with a lender who told me my credit scores were terrible. He suggested a bad credit personal loan.
While there are many causes of bad credit, one of the major causes is bankruptcy. Bankruptcy is a popular, last resort style option for many people who have gotten themselves in way over their heads. It means that you acknowledge you will not be able to dig yourself out of the pit of debt, and that you can no longer continue to meet your credit obligations. While there are several different kinds of bankruptcy, the two major type of personal bankruptcy are a complete write-off of all of your current debts and a reorganization of your current debts so you can continue making some payments to lenders. Either way you slice the bankruptcy pie, though, you are still looking at seven years of poor credit with a bad credit personal loan. The entry on your credit record will stick around that long. This makes most lenders cringe when you walk through their institution's doors. They look at you and see a lack of responsibility seething from your pores. It is a major signal to lenders that you are not to be trusted with loans. As a result, it can cause a very poor credit score.
Even with the red flags going off in their minds, there are lots of reasons that lenders decided to give their money away to people who have proven themselves untrustworthy according to their credit reports. One of the biggest reasons they loan to people with poor credit scores is that they make more money from the loan. If you are looking for a bad credit personal loan, you will almost always pay a much higher interest rate or you will have more points assigned to your loan. Either way, your monthly payments are going to be higher, and the total amount you will pay the bank in the long run will also be much higher. This means more money for the bank, if you manage not to default on your loan.
Even if you have bad credit, though, you will probably still qualify for a bad credit personal loan. You can do this one of two ways. First, you can get a secured loan by offering your home as collateral. This does, however, mean that if you screw this loan up, you will lose your home, no questions asked. You can also get an unsecured loan, but these can be a bit harder to qualify for, and you will not be able to borrow as much as you can with a secured loan.
There are a number of different companies, primarily internet based, that offer bad credit loan. Most of them offer fast, personal service. You can often get a loan decision in a matter of minutes via your e-mail account. This can be a refreshing change to people who are used to sitting down in a stuffy bank environments.
While obtaining a bad credit loan can be more difficult, and they can cost more in the long run, it can help you to reestablish your line of credit after you have experienced credit problems. For me, a bad credit loan was the solution to my problems. Perhaps when my credit report looks a bit sunnier, I can refinance and leave the world of bad credit loans for the world of loans that offer better rates.
Christopher M. Luck has an extensive background with helping others that have terrible credit get a bad credit personal loan and is now offering his free professional bad credit advice to the public. If you are at all interested in Christopher's bad credit personal loan advice, tips, or secrets, you can visit his personal loan blog.