Are you in a tough spot financially but have bad credit?
Or maybe you need some extra money to pay for an unexpected expense. You can’t plan for every eventuality, and sometimes major costs come up no matter how responsible you’ve been. In this case, an installment loan might seem like the perfect solution.
But what about your bad credit score? A credit score that reflects poorly on your history of repaying loans will obviously impact your ability to get a loan now. You’re going to be considered high risk. However, that doesn’t mean you can’t get a loan. Actually, lending companies have loans geared towards people with bad credit.
Here’s what to expect when looking for the best installment loans for bad credit.
How else do lenders vet you?
Your FICO score is generally used to determine the risk factor in giving you a loan. It takes into account your history when it comes to credit cards, rent, past loans, and any other regular financial commitments. It’s the perfect way for companies to see how prepared you were to make payments in the past, but it doesn’t necessarily reflect your current position.
Lenders who are willing to give installment loans to people with bad credit scores generally look at other factors. In particular, they look at your income, your projected income, and your current expenses. If you need to reduce your expenses, consider these personal finance tips.
When looking at your income, they don’t just look at the number. They assess your employment history too in order to see whether they can expect you to keep this job based on your past experience. If they’re happy with what they find, they take your monthly expenses into account to ensure you’ll have enough left every month to repay the loan.
When will you qualify for the loan?
If you’re going the traditional route of applying for a loan, you will fill in all the necessary documentation and it will be processed over the next few days. You won’t need to provide your credit score as part of your documentation, and the company won’t look for it themselves. Once you have been approved, it’ll take about a day to receive the funds in your account.
However, today it’s a lot easier to get a loan via the online route. Online loans have the advantage of being more convenient and taking significantly less time to approve. Some online loan applications will immediately tell you whether you have qualified for the loan. And in some cases, you’ll get the money immediately.
This is especially the case if you’re applying through your bank, which has all your information and may have even pre-approved you for a loan. Banks, however, are less likely to provide installment loans to clients with bad credit.
An installment loan can be the perfect option for anyone with a bad credit history. Not only does it give you an option for immediate financial support, but it can also help you rebuild your credit score. You’ll be given higher interest rates but in the long term, you’ll have much firmer financial footing.