Not every applicant has decent credit history. Many of them ruined their credit score through their past unsuccessful repayments. Other borrowers don’t have credit history at all. Why is it so much important to have good credit history? The problem is that most financial organizations and traditional lenders do not allow the borrowers with a far from perfect credit history to take out money.
Before you get approved by the lender or organization, they analyze your credit history and when they find out you are untrustworthy, they reject your application. However, there is an option for borrowers with bad credit.
What is a payday loan?
This type of funding, also known as payday advance, gives the possibility to apply for money to every type of lender, despite of credit history. A payday loan offers quick cash from a trusted lender. There are a lot of urgent situations in our everyday life, and sometimes you urgently need cash to cover unexpected expenses.
Payday loans can help in paying for rent or some medical bills. This type of lending is considered to be a short-term lending because since you’ve applied for it, you are to repay it within a short period of time, usually due to your next payday.
How to choose the best lender with bad credit
So you need a quick cash advance with bad credit, and start thinking where to find the best option possible. How to find a lender providing Best Payday Loans Online. First of all, you have to find a lender who can offer you the most suitable rates and terms. Those rates that work for you and meet your financial needs are the right option to choose. If your credit is bad, it doesn’t mean that you are eligible only for the lowest rates possible.
To find the best loan options for you, first, need to understand your financial needs. Mind the fact, that payday loans are only temporary financial solution.
Nowadays, it is so easy to apply as everything has moved online. Apply online to save your time avoiding the need to visit the lender personally.
What is a bad credit?
Your credit score shows your creditworthiness as a potential lender. The potential lenders base their decisions upon this rate. Things like approving and extending your loan usually depend on this score.
Financial organizations use special formulas to estimate starting credit score. Several scoring models exist. However, most part of credit scores range from 300 to 850, according to the CFPB.
Before getting approved for a loan, your lender must examine your credit history and credit score. A lender usually gets the information about your credit score from FICO. It is a special financial organization, which estimates your creditworthiness.
So, according to FICO your credit score is bad if it is lower than 580. If this is your case, a potential lender sees the risk and may reject your application. But why is it like this? The research shows, that those lenders with a credit score less than 580 usually end up unpaid on their loan.
Your low credit score represents high risks to the potential lender. You may face many problems when applying for loans, credit cards, mortgages and more. Some other consequences come with bad credit score. It may turn into the situation where you will be forced to pay additional fees or put down a deposit when applying for any kind of loan or credit card.
Can I receive money with no credit check?
If your credit score is 580 or lower and you want to apply for a payday loan there is still an option for you. Those applicants with tight financial situations are still able to receive a payday loan. However, no credit check at all is not possible. There are many lenders, who have special offers for applicants with low credit scores. As a rule, these lenders offer online payday loans without hard credit check.
Nowadays, lenders offer soft credit checks for applicants with low score. These checks don’t impact your credit score in any way. This allows them to check your financial history and credit reports with no consequences to your actual score.
If you apply for a no credit check loan a lender evaluates other determinants. Your employment, sources of current income, other loans are estimated. These criteria draw a picture of financial situation you have. And no hard credit check is performed. However, don’t think it is that easy. Finding a lender who doesn’t perform a hard credit check is quite difficult
How to choose the best option for bad credit loan
- First thing you need to do when applying for a bad credit loan is to see if a lender has a credit score minimum. Apply only for those loans that do not require any minimum. If a lender has comfortable terms for applicants with bad credit consider to get a loan from him. Study Payday Loan Reviews to make up your mind.
- There is a list of other possible qualifications important for a lender when approving a bad credit loan. This list includes:
- First thing to consider is your monthly income from all kinds of sources. The lender needs to make sure you are able to refund a loan on time and in full. Any type of property is also important as it can be used as a collateral if it is a secured kind of loan. These could be real estate, boats, cars, or any other kind of asset.
- The requirements a lender can demand from a potential applicant are clear. But what about the terms that may sign that a lender worth your attention? Itis the actual terms of the loan. The terms should include: the interest rate. It should be as low as possible. The duration of the loan. It should also include the ability to prepay the loan. Monthly payments. Try to choose not very high monthly payments. It is important to be able to refund each payment easily without ruining your current budget.
- Be careful with additional fees and penalties. Fees should be not more than 10% of a total loan value. For example late payment penalty. Ask a lender if there is a prepayment penalty in your contract. Try to avoid this type of penalties.
- And the last but not least is the APR. It includes all kinds of hidden fees. Knowing the APR will give you a clearer picture of what you have to repay.
- Get ready to put forces to find a payday loan with the best rates and terms. And it doesn’t matter what kind of credit score you have. Even those with perfect credit score have to be careful when choosing an option. While some lenders take your credit score as the main factor to approve a loan, others will consider other terms when making a final decision.
If you need a quick loan but you are not satisfied with the rates, consider adding a cosigner or apply for a secured loan. And remember, it’s never too late to start making your credit score better. It will open the doors to much better loan rates in the future.
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