| Tuesday, September 9, 2008 |
| Bad Credit, No Credit - Do Not Let it Be a Problem |
We all know the basics of good credit: borrow only what you truly need, only borrow what you can afford to repay, pay more than the minimum balance, and pay on time...however, knowing what to do and doing it are sometimes two different things. Whether as a result of bad luck (loss of job, medical bills, unexpected car repairs) or just plain old bad choices (designer shoes, gambling, adding your shady soon-to-be-ex to your account), some people may have what might be called less-than-perfect credit. If you are one of the many people with a negative or limited credit history, you are not alone; and while your situation may not be ideal, there may be more options out there than you realized.
Shopping For A Loan
First, become familiar with the programs available to you - auto loans, student loans, loans for debt consolidation, payday loans, and unsecured personal loans are among the most common. You will also need to consider your specific financial goals. Do you need money for a specific purchase, such as a car? Are you financing your education? Will it be a short-term loan, or are you in need of a longer-term financing option?
A debt consolidation loan may be a good choice if you have multiple debts. With this type of loan, you will generally make just one payment per month, which may even be lower than your previous combined minimums. Personal loans, which are sometimes referred to as unsecured loans (this just means that you are borrowing without collateral), are a helpful source of funds for unexpected expenses, such as home or auto repairs. If you just need a bit of cash for a very short amount of time, payday loans are another option - just know that the interest rates on these can be steep, and so they should be approached with caution. Student loans are fairly self-explanatory, as are auto loans.
Application Basics
There are many kinds of loan programs out there, but you will find that they have many things in common. In virtually all cases, you will need to fill out an application, and income and identity will need to be verified. Your employment history will also be considered, by length of time at your current job, as well as total time spent in your field.
Lenders may be concerned about your ability to repay, especially if bankruptcy has been filed previously; and generally speaking, you will be looking at higher interest rates and lower credit limits than those of your more established counterparts. Some loans require underwriting, a process wherein a third party goes over your application in order to determine eligibility, and some require a signed promissory note (student loans are one example). As you can see, every loan comes with a different set of requirements, and every lender will have different expectations.
Rebuilding Your Credit Profile
While obtaining a loan can be a scary thing, particularly if you have struggled with adverse or nonexistent credit, there is no better way to build or rebuild your credit than to take out a loan and handle that loan responsibly. This time, make sure to do things differently. Borrow only what you truly need, only borrow what you can afford to repay, pay more than the minimum balance, and pay on time; and watch as your less-than-perfect credit becomes a thing of the past.
Article SourceLabels: Bad Credit |
posted by Khate @ 2:31 AM  |
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