Getting a bad credit personal loan is not so difficult now that the internet gives us access to so many more companies than were available in the past. Before the internet, somebody living in a small town might not have much option but the banks, and banks are very conservative when it comes to lending money. They do not like to lend to anybody with a bad credit history.
Online, many companies advertise loans specifically for people with a bad credit history or low credit score. This usually means that you or somebody in your close family had trouble paying back a loan in the past, or have outstanding debts, or something similar. Sometimes these low credit score loans are guaranteed.
If you have a low credit score for any reason you will probably have to pay a higher rate of interest on your loan than a person with a better rating would pay. This is because the lender considers there is a higher risk that you will not pay. The higher interest rates are a kind of insurance for them against the trouble they will have in getting the money back from anybody who cannot repay. This does not mean that they will not chase after you if you do not pay. It is just to cover them for the legal costs that they consider they are more likely to have.
Be sure always to read the small print of a loan application. First you will want to know if it is a secured or an unsecured loan. A secured loan means that you must offer some property or possessions that the loan company can take from you if you do not pay. This makes it easier to get a loan with a lower interest rate, but you may lose whatever you offered as security if you cannot make the repayments.
Real estate is the most popular security for a loan, but the majority of people with a bad credit history do not own real estate. If you would prefer a secured loan but do not own your home, check if the company will accept any other type of security.
It is important to be sure you are dealing with a good reputable company. It is easy for anybody to have a professional looking website but it is important to know who they are. Investigate the company with the Better Business Bureau and check out any parent company or subsidiary companies that are named on their website.
Make sure you know what will happen if you need to miss a payment, and whether the loan can be recalculated over a longer period if you need that. Some companies are more flexible than others on these points.
Some people with a low credit score take out one loan to pay back all of their other debts (a consolidated loan). Consider carefully whether it is worth doing this. Some of your other debts may have very high interest rates and it might save you money as well as time to have one consolidated loan. However, sometimes there are penalties for repaying your other loans early. This can be complicated to figure out. If you hate this kind of paperwork, try to find somebody who will look over the figures with you before you sign.
Sometimes a person can have bad credit because of something like identity theft where somebody else has run up debts in your name. To the banks and other lenders this does not make a lot of difference. They do not care whether any debt that is showing against your name was your fault or not. However in this situation you should do all that you can to repair your credit score before getting a guaranteed bad credit personal loan.
