Having a bad credit score is stressful, especially if you got there through making bad financial decisions. Your business might also have fallen on bad times, or you might have lost your job. When you have a bad credit score, getting most lenders to loan you some money becomes quite a task.
There is some hope for you though. It is possible to get a secured loan even with bad credit.
What is a secured loan?
A secured loan is one that has some collateral. In other words, you give something tangible, like a car or building. If you are, for whatever reason, unable to pay back the loan, your lender uses the collateral to pay themselves back.
Your lender will want to see your credit score before they commit, and you can get that report at a small fee. Depending on the report they get, you may qualify for a mortgage or a car loan. A car loan is easier to qualify for than a mortgage, especially if your credit score is in shambles. It is still important for your other finances to be in good shape. They need to know that you have a steady income that is enough to cover all debt.
Feel out the different lenders.
- There are many lenders out there and you will be well advised to speak to a number of them. You will find that no lender is the same as the next one.
- The best place to begin is the known before you test new waters. That is, begin with your regular bank because you already have a history with them.
- If they are reluctant to take you on, then move on to the next lender.
You will find that some lenders will treat you like you have the plague or worse. Don’t let that discourage you. Move on until you find one that will listen to you, and give you the money you need.
Ensure that you make your payments on time.
Avoid making late payments. That sends out alarm bells. Besides, you want to improve your credit score. Having bad credit is not a permanent state. Once a lender sees that you have been making your payments on time, they will be more willing to give you loans despite your history.
Cut down on your debts.
Reduce the amount of debt you have. It does not reflect very well on your creditability. A reduction of debt also increases the size of loan you are likely to qualify for. So, get those credit card payments and student loans out of the way. In any case, you do not want to be too deep in debt. It is stressful to think about all the money that you owe at the end of every month.
So, if you need some money and your credit score is not very impressive, you can look up to top 10 secured loans for bad credit and see who you can talk to, because having a bad credit history does not mean that you cannot qualify for a loan.