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How To Get A Poor Credit Loan

By Edited Nov 13, 2013 1 1

If you previously defaulted on mortgage payments or did not maintain credit card payments, you may have a low credit rating. Yet you might have a circumstance where you still need to borrow some money. In that case, you would investigate the possibility of getting a poor credit loan.

Because of your historically poor credit risk, poor credit loans come with a very high rate of interest. Yet these loans can be a good step forward, helping you improve your credit history as long as you make your loan payments on time and pay off the loan completely.

You might find that you have to apply several times before you are accepted for a poor credit loan. There are companies whose specialty is lending to poor risks. By getting a new loan and paying within its terms, you can start to slowly improve your bad credit history. While it may be tough at times to make these new payments, it is important to make at least the minimum payment each month. Missing a payment even once can result in significant credit problems for many years.

Sometimes homeowners can get a poor credit loan by using their property as security. This definitely has an advantage over someone who needs a personal loan but has no collateral. You will probably be able to borrow at better terms such as a lower interest rate and/or a longer time for repayment.

Keep in mind though that by securing a loan with your property, you could be placing your home at risk. The only reason you were able to obtain the loan to begin with is because you have your house to back it up. If you miss any of your payments, the lender could take your home.

If you have no collateral, you are looking to take what is called a personal loan. Since it is unsecured, it will probably have a higher interest rate and a shorter term.

You might have a friend or family member who is willing to guarantee repayment, you might be able to get a loan. Typically this friend or relative has to be a homeowner as they will be putting their home up as collateral for your loan. This is a very big risk someone else is taking for your benefit and needs very careful thought before moving forward. If you miss making a payment on time or pay the loan in full, the lender will go after your relative or friend for the payments, not a good situation for anyone.

You can start looking on the Internet to compare poor credit loan rates. There are a lot of choices and a lot of information available on line to help you decide what to do. You can also get help by meeting with a debt counselor.



Jun 8, 2010 9:21am
Great tips on getting a loan with poor credit.
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