Low Credit Score Loans: Helpful Advice on Unsecured Loans for Poor Credit

Low credit score loans are a means of borrowing money when an individual has an adverse credit history. It is possible to get a secured loan on an item of value or get a quick cash advance without being required to provide any collateral.

Low Credit Score Loans

The overwhelming majority of bad credit homeowner loans involve a credit check. However, a quick cash advance, such as a payday loan, can be provided on the same day without this requirement. The risk faced by adverse credit lenders will be reflected in the monthly repayments.

Interest Rate When Borrowing Money

An unsecured loan for poor credit will attract a higher rate of interest than a loan that is secured on a house, car or other item of value. The default rate faced by a bad credit lender is a lot higher. The interest rate charged will reflect the risk; the provision of collateral helps to reduce this.

Establishing Affordability

Whilst a quick cash advance can help someone out of a short-term financial hole, the interest rates on such loans are often usury. Payday loans regularly attract an APR of upwards of 1000%. Consider carefully how paying $15 to $20 on every $100 borrowed will affect family finances the month after.

FICO Credit Scores

A poor credit history needn’t last indefinitely. Making timely repayments on loans, mortgages and bad credit cards will help to improve a FICO credit score in upwards of 6 months. Bank loans for bad credit should be refinanced at a later date as more competitive deals will be available.

Where to Get a Low Credit Score Loan

  • Pawnbrokers. Those who wish to borrow money need to provide the pawnbroker with an item of value (such as gold, jewelry or electrical equipment). Interest rates are typically about 80% APR.
  • Payday loan lenders. Provide a quick cash advance without the need for a credit check. Applicants will need to be U.S. citizens, in full-time employment and be able to provide identification.
  • Credit Unions. A non-profit organization that lends money to their members at an affordable rate.
  • Prosper.com. This is a peer-to-peer lender where people lend money to each other through a bidding interface. It is possible to apply for $25,000 unsecured loans for poor credit.
  • Logbook loans. Bad credit lenders offer loans to customers based upon the value of their car. It is necessary that the vehicle is fully owned by the individual and not in a live hire purchase agreement. The car doesn’t legally belong to someone until the final repayment is made.

Whilst low credit score loans can help someone out of a short-term financial hole, they can also be a source of further financial difficulties. It is important that anyone who is considering one is in a position to make repayment as interest can and will accumulate quickly.

Lowering Debt: Clearing Credit Card Debt a Lot Faster

Lowering debt is a priority for every family that sees a growing percentage of disposable income being taken up by debt interest payments. The Federal Reserve’s G.19 report on consumer credit revealed that the median level of unpaid charge card debt was $15,519. Clearing credit card debt can be difficult, especially if there wasn’t enough money to pay the bills in the first place. Fortunately, there are ways to pay off debt faster without breaking the bank in the process.

Debt Resolution: Affordably Lowering Debt

Paying off credit card debt can be achieved at an accelerated rate with a debt free plan, such as a debt management plan or debt settlement program. In order to proceed with a debt relief program, any credit agreements that are to be included in the repayment plan must have been defaulted on. If the customer continues to make the minimum payment, the lender will continue to milk this for the next 40 years. As far as the banks are concerned, this makes for the perfect customer.

Why Clearing Credit Card Debt is Possible

Issuers are far more likely to agree to a debt relief program, such as a debt management plan or debt settlement program, when the account has been sold-on to a debt collection agency. Financial institutions sell-on debt for as little as 10 cents to the dollar and write-off the balance against taxation. When the account is in the hands of a collection agency, offering a reduced sum of money is far more likely to be accepted because offering to repay just 50% of the balance represents a considerable profit.

Getting Out of Credit Card Debt with a Debt Free Plan

  • Debt management plan. Following a comprehensive budgetary analysis, it will be determined how much can be affordably contributed to creditors each month. Under a debt management plan, the client will make a repayment to an intermediary and they distribute the proceeds to creditors on a pro rata basis. Although it may be possible to freeze further interest and charges, lowering debt will take longer at the reduced repayment rate.
  • Debt settlement program. The intermediary will attempt to secure a debt reduction of up to 50% and the remaining balance will be cleared over a period of up to 36 months. Although the debtor doesn’t receive full court protection from creditors, a debt settlement program is widely regarded as the leading alternative to filing for bankruptcy.
  • Chapter 7 bankruptcy. Not everyone has sufficient disposable income to offer creditors each month. Provided that the debtor’s income is below the state median, clearing credit card debt can be achieved in about 4 months. People who have filed for chapter 7 bankruptcy in the last 8-years will need a new debt solution due to the 2005 bankruptcy laws.

Is Lowering Debt Possible?

Clearing credit card debt more quickly is achievable, but it requires discipline and a bit of luck. Failing to keep-up with the agreed repayment terms will lead to the return of collection agency calls. A lot can happen over the course of the next 3 to 5 years and this can making paying off credit card debt more difficult. Filing chapter 7 bankruptcy is only suitable for tackling serious debt. Although it is possible to file without legal assistance, a bankruptcy attorney is likely to be needed for the more complex cases. Once a debt resolution has been achieved, it’s important to stay out of debt by making the right decisions.

How to Apply for a Mortgage Loan

Step 1

Check your credit bureau report. It is imperative that you find out what your credit looks like at least six months before applying for a mortgage loan. Websites such as AnnualCreditReport.com and CreditReport.com are great places to start. Make sure you check your credit report thoroughly for errors, and dispute anything that is not accurate. Taking the time to do this will help boost your score, allowing you to lock into the best interest rates on the market.

Step 2

Organize your paperwork. Since there are no longer light documentation loans, it is essential that you get your paperwork in order.

All lenders require the last two years of W2s, last 30 days of pay stubs, and the last 60 days of all financial statements from your accounts. If you are a self-employed borrower you need your last two years of tax returns, and a CPA letter or business license confirming that you’ve been self-employed for the last two years. There will be more paperwork after you choose your lender such as a borrower’s authorization (allows the lender to verify rent, employment, deposits, etc.), and Form 4506-T (allows lender to request tax returns from the IRS to check for discrepancies). The faster you get all of your documentation in for underwriting, the faster you can close on your loan.

Step 3

Determine the type of mortgage loan you want to apply for. If you are working with a minimal down payment, FHA would be the sensible route. FHA loans only require 3.5% down, and even though there is a lot of extra paper work involved, it’s the only way to apply for a mortgage loan without at least a 5% down payment.

The only exception is the VA loan, which offers 100% financing solely to veterans.

Another consideration for loan type is if you need a fixed rate or an adjustable rate. If you feel that you might only be in the home for a couple of years, it might be best to go with the lower adjustable rate. The most popular is a 5/1 ARM, which is fixed for five years and adjusts after that time. If this is your long-term dream home, consider a 30-year fixed, because the rate will not change over the life of your loan.

Step 4

Choose a lender that you trust. Mortgage loan officers will do just about anything to get your business, because the majority of them operate on 100% commission. From being a loan officer for eight years at a popular banking institution, I know how they think. It is their job to make their company look most appealing, and they are experts in sales. This gives you an advantage. You can freely compare loan options with several different lenders to get the best pricing and terms. If you are super savvy, you’ll not only be able to apply for a mortgage loan, but you’ll have plenty of options to choose from.

Tip: before checking with the smaller mortgage firms, check with your personal bank and credit unions. They might have discounted pricing available.

Warning: if you’re a self-employed borrower, you need to know that loan approval is based on your adjusted gross income. If you write off all of your expenses, you’ll find it difficult or impossible to get approved for a home loan.

Free Credit Report Online

Tips Included

They say you can tell a lot about a person by what is in their credit report and I was curious as to what was in mine. I had worked myself to the bone after I turned eighteen to try and build my credit up and what I later found out, not only shocked me but had also shocked the cops.

I had often heard about ways to get a free credit report online but had never tried it before until I learned that my electric was turned on at a different address, one that I had never lived at before.

I must have been around the age of 21 when I tried to have my electric turned on at my new house. The electric company told me that I had a rather large bill that needed to be taken care of. I told them that they must have the wrong person because I had never had service with them before. I sweet talked my way into getting the address where the service was on at and the lady told me about a way that I could obtain a free credit report online.

The name of the company was easy to remember, freecreditreport.com. It was so easy to remember that I went home and looked the site up. After entering some simple information like my current address, social security number, my previous address, employer, and a little bit of other information, I was able to print out and look over my free credit report online. This wasn’t just any free credit report company; they allowed you to obtain your free credit report online from three of the major credit reporting agencies.

After reviewing over my credit report, I noticed that there were a lot of bills and other things that were there that I had not signed up for. I was in a mass hurry to get this fixed but didn’t know where to begin so I looked at the website, freecreditreport.com, and found a link to where you could object to any negative readings that you had obtained from your free credit report online service.

I simply filled out the information and received a phone call from them within the next twenty-four hours to let me know that they received the information and was going to investigate it. They were also nice enough to let me know what my next steps should be as far as notifying the police and how to get my credit back in order.

I had also received information on how to be alerted anytime that something in my credit report changes. They allow you to try out their alert service for a month before being charge $12. I tried the free trial and loved it.

Tips to help you obtain a free credit report online:

If you really want to know what your credit report is without having to pay for it, anytime that you fill out an application for a loan that is denied, you are able to receive a free credit report and you can look up a free credit report online service like the one that I had mentioned before to receive yours free of charge.

Also, once a year you are allowed to receive a free credit report from all three major credit reporting agencies free of charge and you should mark this day down in your calendar and get a free credit report online.

Many companies will also allow you to have a free trial with their free credit report online services for a small period before being charged. Sign up for one of these companies and take advantage of the free credit report online just remember to cancel before the trial ends.