No Credit Personal Loans: Secure vs Unsecured Loans for People with Bad Credit

If you have a bad credit score, finding a company, or person, to lend you money can be completely frustrating. Typically, when your score is lower than the national average it means that you have shown a tendency to either pay your bills late each month or not at all.

Your FICO score is not simply a random set of numbers based upon the whims of the three major reporting bureaus. It is a mathematical model based upon numbers factors such as timeliness of credit payments, length of your credit history and total available credit remaining when compared to your available limits.

As lenders are in this business to make money, if you have a low credit score you may be a risk that they are unwilling to assume. Fortunately, there are companies that are willing to provide personal loans for people with no credit.

Secured Loans for People with Bad Credit

If your credit is less than stellar, most lenders will try to get you to take out a secured loan. A secured loan is a structured to require you to attach some form of collateral against the loan. A good example of this would be those ‘Titles for Cash’ places you see along many major highways. These companies may require you to either leave the title to your vehicle with them or allow them to place a lien against your vehicle until you repay the loan. The only real advantage to obtaining this type of loan is that you can usually qualify for one through a larger, more conventional lender, like your local bank, instead of some shady building on the side of the road.

Unfortunately, many people end up losing their possessions when they are unable to repay the debt. If this scares you, and it should, consider trying to obtain an unsecured loan.

Unsecured Loans for People with Bad Credit

Obtaining an unsecured loan is a much more difficult process. Unsecured loans for people with bad credit typically do not require you to attach any form of collateral. Lenders analyze your credit history and you ability to repay the debt much more closely. Additionally, the interest rate that you will be charged will be significantly higher than if the loan was secured with some form of collateral. You should expect to pay anywhere from 4 to 20 % more for an unsecured loan.

Having a bad FICO score should not prevent you from being able to obtain the no credit personal loans you need. Carefully consider the advantages, and disadvantages, associated with secured and unsecured loans. As with any form of debt, serious risk exists.

If you are tired of being in debt and are looking for a better way, visit How to Become Debt Free.