Which payday loan is best for
people with bad credit?
Which payday loan is best for people with bad credit?
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Dealing With A Bad Credit Score Using Poor Credit Loans
We all know that banks are the primary source of a loan, and it’s also no secret how stringent they are with their requirements. A bad credit automatically ends up with rejection, wreaking more havoc on your credit report. But why is this happening? Why is the credit score used as a crucial factor in making a decision? Is there any hope for bad credit borrowers when they need a financial assistance?
Poor Credit Loans: Before going to alternatives, let’s find first find out what a credit report is.
A credit report contains a detailed report of a borrower’s credit history, which was collected and prepared by the credit bureau. Loan providers use this, along with other credentials, to determine the loan applicant’s creditworthiness. Every lender has their credit remark but in general, it looks like the one shown below:
700 to 850 – Very good/excellent credit score
680 to 699 – Good credit score
620 – 679 – Average credit score
580 to 619 – Low credit score
500 to 579 – Poor credit score
300 to 499 – Bad credit score
Borrowers who have low credit remark are deemed risky because of the previous financial mistakes they have. It’s normal and inevitable, but most lenders will not consider this regardless of the reason. But thanks to the development nowadays, many private loan providers are willing to provide poor credit loans so they can still have the advance they need in times of distress. It’s easy to acquire since there’s no credit check; the downside, however, is that it carries a high-interest rate that is often hard to settle. Therefore, if you wish for a cheaper loan option, it’s imperative to have a good credit remark.
To start fixing your credit rating or to create a new one, be sure to take note of these financial mistakes and avoid involving yourself with one:
- Late payments
One of the common causes of a low credit remark is the late payment. The simple delay of repaying the loan already damages your credit report and on top of that, you are going to settle penalty fees, making the poor credit loans more expensive. To avoid this, be sure to borrow only the amount you can afford and in case you cannot settle the debt on time, talk to your lender. Some loan providers can provide better options such as extending the loan’s due date or reducing the interest rate.
- Defaulting on poor credit loans payments
Unexpected expenses or circumstances, such as losing a job often lead to default. This refers to the failure of repaying the loan when it’s due. Aside from reporting it to the credit bureau, the lender has the right to take legal action against the borrower just to get their money back.
- Filing bankruptcy
Bankruptcy is deemed as the most devastating credit mistake you can ever make. It refers to a legal status of a person who cannot settle loans and other debts anymore. Aside from lowering your credit remark, it stays on your credit report for more than 7 years. As a result, creating a new line of credit is very difficult; even applying for a new credit card is impossible.
There are times when you will use your home equity as a security against the loan or you’re getting an advance to purchase a new place. In case you cannot commit to its terms and conditions anymore, you can lose the property. Not only will you have no place to live anymore; it will also damage your credit rating for a longer time.
- County Court Judgment (CCJ)
County Court Judgment, or CCJ for short, is the term used when a court order is filed against you. This takes place when you have been granted with an advance but you cannot settle it according to the loan contract. You won’t go to a jail because of this, however, this will cause trouble in your finances in the latter part. Creating a new line of credit is almost impossible for anyone with a record of CCJ.
It is true that these mistakes are inevitable but there are a number of ways to avoid it. For the meantime, if you cannot improve your credit remark yet, you can rely on poor credit loans to satisfy your monetary dilemma. Some of the popular ones are the personal and payday loans.
Both poor credit loans alternatives skip credit check although some lenders may still ask for your credit report. It will be used as a basis of the maximum loan amount they can lend you and the interest rate to be charged.
Since you have a bad credit score, these poor credit loans only offer a decent amount which is useful when you have a sudden bill or an urgent expense. It has a high-interest though as this is the lender’s way of reducing the risk. But despite the critics, the loan is still a popular choice. In as fast as one hour, the lender may release his decision. In case your loan application was granted, you can have the loan electronically transferred to your bank account. Repaying payday loans and personal poor credit loans can be done using a postdated check or via bank debit.
Downside Of Poor Credit Loans
Apart from the exorbitant interest rates, poor credit loans are often settled in a short period of time, usually within a month or less. This means the borrower has to give back the one lump sum, including the principal rate, interest, and charges – within two weeks or one month. Some lender may offer a loan extension or “rollover” but this only means repaying for additional charges. Most borrowers who extend poor credit loans are trapped in a vicious cycle of debt.
In addition, poor credit loans offer a modest amount which is only enough to tide you over a month. It can’t be used to purchase properties or pay for large expenses. However, it is enough to suffice urgent bills, pay for utilities, purchase groceries, etc.
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Representative Example: £160 loan for 15 days at a fixed interest rate of 290% pa. Total amount payable is £179.07 in one single repayment. This is based on the amount of credit plus interest, no other fees apply. Representative APR 1449%
Employees are the drivers of the global economy. They comprise a large percentage of the workforce, and the world will stop without them. If you’re going to analyze deeply, you’ll realize that all of us are employees. We are working for someone else – be it a boss, an organization, or a contractor. Employees are good demographic points because they tend to experience financial troubles more often. It could be that employees are also parents, or they need quick cash to survive until the next payday. In fact, the borrowing habits of employees empowered payday loans (that’s why they called ‘payday’). Employee-centric payday loans don’t have much difference from the cash advance programs of the past, though some lenders have made adjustments. Employee payday loans probably have a smaller interest rate stretched over a manageable repayment period. Lenders can also work hand in hand with employers to increase awareness for employees.
Freelancers on A Budget
The global freelancing community is starting to gain important traction this 2017. In fact, thousands of people are now resorting to freelancing because of the awaiting opportunities in the market. Freelancers are like hunters – they’re actively chasing big game, occasionally hitting and, oftentimes, failing. New payday lenders have understood the need for freelancer-specific loans, though only a few of them are following suit. Perhaps freelancing still needs to be recognized as a tangible income source in the payday lending arena. Another angle is the way people are tagging themselves as ‘freelancers’ even though they don’t have any jobs or income sources. This is why some lenders will look for additional income proofs whenever they encounter freelancers applying for payday loans. Nevertheless, we’re going to see lots of payday loans geared towards freelancers on a budget this year.
Being an entrepreneur today is no longer a side path – it’s necessary for the betterment of your life someday. Once you have a winning idea and transformed it into a plan, you can focus on acquiring capital. If your startup business is not that big, you can settle for a payday loan. Payday lenders can release your money in just minutes. They won’t care about your credit rating or the nature of your business (somehow). What they want to know is if you’re capable of repaying the loan within the agreed time frame. Once you got your payday loan, your business operation can be ignited and you’ll start raking profits in no time. Just remember to allow some of those profits towards your loan repayment. An unpaid payday loan can bring too much stress.
You may think that big-time investors are going after large, bank-issued loans. Well, you’re right. A stock investor, for example, needs big loans if he wants to participate in a growing market. The same can be said for antique collectors and coin enthusiasts. However, we can’t deny the fact that investors also start small. In this sense, small-time investors can use payday loans to fund their investments. Whether they make a killing or not, investors can see potential attention from new payday lending companies.
Once you understand all of these demographic points, you’ll know how lenders are adjusting their operations strategically. At one point, they may pursue better marketing efforts while compromising other areas. Despite this, it’s still important to find a lender that attains a great form of balance among all of these demographic areas.
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