From time to time, we all need urgent cash for some big purchase or debt consolidation. By borrowing money, we can get a lot of money for lavish purchases or anything else. A credit score is a three-digit number that shows your creditworthiness for borrowing money from a bank. It is the very first thing that lenders check whenever you apply for a loan. By checking your credit score, lenders come to know whether you can pay the loan on time or not. Thus, maintaining a good credit score is crucial for getting a loan so we’ve discussed briefly Bad Credit Loan Features.
Credit score usually ranges from 300 to 850 where score below 630 is considered bad credit while above 630 is good or excellent. A high credit score means borrowers are more likely to pay the loan on time. Applicants can maintain their loans by making all the payments on time, paying off existing debt on their credit cards, checking their credit reports frequently, and keeping their credit utilization low below 30%.
But if borrowers have a bad credit score, they might find it difficult to get an unsecured personal loan, or if they get, they will receive a high-interest rate. That’s where a bad credit loan comes in. This is the type of loan that is specifically made for those who have bad credit scores. So what are bad credit loan features? Let’s take a look:
Bad Credit Loan Features
Many community-based credit unions offer flexible personal loans to borrowers with low credit scores. These unions offer loans regardless of your credit score. Instead, they consider your character and promise to make payment. One of the biggest advantages of these types of loans is they don’t charge a high-interest rate. Their interest rate comes between 18% to 36%, which is highly less than banks. This low rate helps the borrower to improve credit score and save money.
No Credit Check Loans:
Another great way to get a loan with a low credit score is through no credit check loans. These types of lenders offer loans without any credit check. But they charge a high-interest rate and an additional fee if borrowers do not make timely payments. Moreover, borrowers have to pay the loan within a short period of 3-4 weeks.
Guarantor Loans / Co-signer
In these types of loans, the borrower needs to sign a guarantor who promises to repay his loan if he can’t. A guarantor/co-signer with a high credit score can help to borrow a loan with a fairly low-interest-rate But being a guarantor means you’re at high risk of losing your assets if you struggle to keep up payments.
In Peer-to-peer lending, clients borrow a loan from an individual or group of investors without borrowing from a bank or building society. The borrower lists the loan amount, and its use on different peer-to-peer websites, and the investor selects the applicant they wish to give the loan. One of the biggest advantages of these types of loans is you can get the lowest interest rate even with a bad credit score. Plus, the borrower is not at any risk of losing his assets.