All You Need To Know
Even if you have a poor credit history, this does not mean that you cannot get a loan. Perhaps you have experienced problems with your credit in the past and having financial difficulties at the moment. If you have a poor credit score, you will not qualify to secure a personal loan. However, there are other loans for people with bad credit that you can utilize.
There are different types of loans for people with bad credit. These include secured and unsecured loans. A secured loan is one where the lender has a claim on your belongings if you are unable to keep up with paying them back their money. For secured loans, there is a chance that the interest will be lower. They are however risky since you are at risk of losing your home if you cannot pay back the amount.
Another type of bad credit loan is a guarantor loan. This is an unsecured loan which is aimed at helping those with poor credit scores. However, if you want to qualify for this loan you will require a guarantor. This is a person who will be willing to meet your repayments in case you yourself are unable to keep up with them.
The guarantor has to have a good credit score for you to receive the loan. In addition, the guarantor should not be linked to you financially in any way. For instance, you cannot have your spouse as a guarantor. You will also need to ensure that the guarantor knows the risks that are involved so if anything goes wrong, it will not foil your relationship.
If you are able to make your payments fully and in time, some companies may drop the interest rate that you are being charged for the loan gradually since your credit score will be improving.