Finding a loan when you have no credit can be as difficult as finding a loan with bad credit. But the major difference between the two, is, that if your issue in obtaining a loan is because of NO CREDIT, you have less of a hurdle in the long run than if you have BAD CREDIT. If you have bad credit, do not worry. There are options for you. But repairing your credit will be an additional task that you will
have to take on that the person with ‘no credit’ will not have to worry about.
What is a Bad Credit Loan?
A bad credit loan is an option for consumers with low credit scores that prevent them from obtaining a loan from traditional sources. Many lenders will not take on a client with a credit score below 620.
But the relief you need is available through a bad credit loan. In most cases, a bad credit loan, which is also known as a personal loan, can help you out when you need cash fast.
So, if you have found yourself in a spot where you need cash fast to buy a car, or fix a car, make payments on medical bills or other debts, but your credit score is not high enough to get a loan from a big bank, you do not need to feel hopeless. You can get a bad credit loan today.
These bad credit loans are essential the same as a personal loan. The lender provides you the money upfront, and you pay back the money in fixed monthly installments. Most sources of bad credit or no credit loans come from credit unions, family, friends, co-signing on a loan, home equity line of credit.
Secure a loan today. Your urgent needs do not need to wait.
What Is considered a Bad Credit Score?
A credit score reflects your payment history and other factors that allow a lender to rate your creditworthiness. You will be favored by lenders if you have higher credit score.
However, if you have a lower credit score, or a score under about 620, you will likely find it difficult to obtain a loan at big banks and from traditional sources.
In general, ratings for credit scores are:
- Excellent/very good credit score: 700 to 850
- Good credit score: 680 to 699 (U.S. Average is a score of 682)
- Average/OK credit score: 620 to 679
- Low credit score: 580 to 619
- Poor credit score: 500 to 579
- Bad credit score: 300 to 499
Why Bad Credit Scores are Bad for You
Those that have good to excellent credit scores will receive the most competitive interest rate and loan terms. A lower interest on your loan will lower the overall cost of the loan. If you fall into the poor category or lower, you will have very high rates, or worse, will be declined from most lender for any loan.
While it does not seem fair to make it more difficult for those that have financial difficulties and favor those that have had advantages financially, it is currently the most reliable way that banks use to evaluate lending opportunities.
It is important to understand how a BAD CREDIT SCORE affects you in the long run. See the example below on how interest rates matching up to credit scores affects how much interest you will pay over the life of the loan.