In the USA, more than 10% of its citizens live with a bad credit score (below 650 points), and most of the time it’s not their fault. The economic situation can change dramatically in a matter of weeks, as has occurred during the current coronavirus pandemic. Stores that were there since you were born are now closing their doors because they were not able to adapt to the new economic reality.
We asked Kyle Drummond (a financial advisor with more than 5 years of experience, now also working as an expert at DirectLoanTransfer ) to share his views on the current situation in the US:
“The economy is not collapsing in our usual understanding of the subject. It’s more like a delayed hit, you can see it around you, stores are closing right and left, that means that people are getting fired and getting their businesses shut down.”
“Government is trying to do something with their financial aid money and other measures but I’m afraid that will not be enough. Most of the American citizens are starting to drain their bank accounts and by the end of the year we could face the real consequences of the pandemic.”
In comparison, the Spanish flu that hit the US in the 1918-1920, was right at the end of the economic downfall and marked the start of its rebirth. We live in a very different world today. What happens in one part of the world can affect what takes place in every corner of the globe. Our economy today is a global and interdependent one. The current levels of international travel, for example, did not exist one century ago.
Research shows that now more than ever, people are interested in bad credit loans. Bad credit loans are relief options for consumers with very low or no credit scores that limit their borrowing options or restricts them from loan approvals.
For you to get loans with bad credit, it is advisable to first consider how to increase your score. Your credit score determines what type of loan offer you may get, if at all. The lower your score, the higher the interest on a loan will be; your chances of being turned down are also greater.
Tips to boost your credit score
- Make on-time payments, especially on credit cards, to reduce the balance.
- Do not apply for any new loans if your risk of being refused is high. Every time you apply and get turned down, your score suffers.
- Ask for higher credit limits on your current arrangements.
- Check your credit report and dispute any errors.
- Pay all your bills on time.
By simply following these five recommendations, you can improve your credit score significantly within a few months.
Banks are concerned about the economy
Kyle says that the banks are more than ever interested in consumers because if businesses can feel the backlash of the pandemic economy right now, the banks will feel it in a couple of months, when their clients start defaulting.
Most businesses adapt by finding new markets, making new products, or offering different services. Banks cannot do that. They exist by taking people’s deposits and lending that money to others. They make money by charging higher interest rates to borrwers than they pay to depositors. That us why they are eager for you to become a borrower. i.e., it is in their interest to help you find a loan.
Do your homework before applying for any type of loan if you have a bad credit score. Also, consider carefully why you want to borrow. Do you really need the money? Is there any other way to get funds such as selling something or asking a family member for help?
Interesting related article: “What is my Credit History?”