If you need money but have little or poor credit, you should know the process on how to obtain personal loans for bad credit. Getting approved for an unsecured personal line of credit is a simple process if you follow a few steps to prepare your application and do some research into your options. Here is how to get started.
Generally, you may qualify to take out an unsecured debt if you are 18 years of age (the legal age to sign a contract), are a citizen of the United States, and can demonstrate a steady, monthly income. Some lenders may have a minimum income requirement in order to qualify. Your lender will give you a list of documents they will need in order to approve you.
The application process should be fairly simple; the lender in most cases is only trying to determine if you have the ability to repay the amount borrowed. Even if you have a bad FICO score or blemishes on one of your records, the lender may use other factors to determine your credit-worthiness.
Before you make out an application for this or any other line of borrowing, you should educate yourself about your FICO score and your report. US Citizens can request a copy of their loan repayment report yearly from one of the three major bureaus. On this report will be listed any negative information about your repayment score or record, and any factors playing against you (such as short repayment history, high revolving balances, or recent reported late payments). Clear up any mistakes on your report before approaching a lender.
Once you know the facts on your financial report, you can contact a lender to find out how much you qualify to borrow, the terms of the agreement, and the interest rate and other fees associated. Depending on your income, credit score and other factors, a lender should be able to give you a solid dollar amount, along with all the repayment information you will need.
Because a personal loan is typically unsecured (meaning that it is not attached to collateral, such as a car), the interest rate on a personal loan will be higher than other types of lending. Your state sets lending limits (called usury limits) on personal loans. Check with your state to find out what the maximum amount your lending company can charge for interest, and be suspicious of any lender offering you too large a loan, or interest above the maximum rate.
Once you have secured your loan, it is your responsibility to maintain the payments on the loan every month. If you fail to make payments or default, you could face penalties, fines, or further damage to your repayment record. On the other hand, a handling your monthly payments responsibly could be the first step to sorting out all your finances.
If you are considering securing personal loans for bad credit, the first step you should take is to get educated. With a little work upfront, you can find a reputable lender to help you, no matter the situation. With continued effort, your line of credit could put you back on the road to a better financial track record.