There was a time when the stigma of bad credit was so severe that individuals would do their utmost to hide the fact. It was the demands of the times, more than anything else, but the modern attitude is more proactive. Low credit scores can be improved and, with this in mind, it is not impossible to get approvals on personal loans with bad credit.
In fact, the reality of bad credit has hit home with millions of Americans over the past three years, with the credit crisis and economic downturn contributing to a fall in credit scores amongst even the most responsible borrowers. And since the motivation is there to improve ratings, and climb back to a strong borrowing position, getting loan approval despite poor credit is easier than many would think.
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There are some steps available that improve the chances of securing approved personal loans with poor credit. Amongst them is to improve your credit rating on a gradual basis, building the score up so that, in the future, the likelihood of securing a large unsecured personal loan is greatly increased.
Improving Your Rating
In truth, borrowing again and making repayments without a hitch is the only effective way to rebuild your credit score. After all, these ratings reflect the reliability of borrowers in repaying personal loans with poor credit.
However, low scores prompts a reluctance amongst some lenders to issue loans. Getting loan approval despite bad credit depends on whether the lender accepts the added risk involved.
They compensate this risk by increasing the interest rate, and reducing the loan sum they are willing to part with. As a result, it is practically out of the question to enjoy large approved personal loans with poor credit; small loans are much more acceptable, however.
Advantages of a Payday Loan
The payday loan, which is also known as a cash advance loan, is the best option when it comes to seeking a small personal loan with bad credit a part in the equation. These loans are effectively cash advances on upcoming pay checks. So, they are repaid in full on the next pay day - though sometimes it is possible to spread the payments of 2 or 3 pay days.
The fast repayment schedule is possible because loan approval despite poor credit is secured on the basis that the sum borrowed is significantly less than the pay check amount. So, for someone who earns a monthly income of $3,000, for example, a loan of $1,500 may be acceptable. Approved personal loans with poor credit are perfect when small and easy to repay.
Disadvantages of a Payday Loan
Of course, like all personal loans with bad credit, there are criteria that must be met. For a start, each applicant must be over the age of 18, in accordance with general lending regulations.
Secondly, applicants, must be able to show they have been employed full-time for a period of 6 months before the application is made. And finally, applicants must have a bank account showing a balance equal or greater than the sum being borrowed.
The chief negative aspect to get approved is that they come with high interest rates. However, because the loan is repaid so quickly the actual amount of interest paid is much less.
But once the loan is repaid, credit scores increase. After repaying a number of small personal loans with bad credit, the rating will have improved so much that bad credit may not even be a factor any longer.
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