Many people will need to apply for a loan at some point in their lives, and your credit rating is one of the top factors that will be reviewed during the loan application process. Loans may be used to pay for a new car or house and to consolidate credit card debt. Some loans are even used to help individuals get by until their next paycheck arrives. Regardless of whether you need a short-term or a long-term loan and whether you have plans to apply for a secured or unsecured loan, credit scores matter. However, even if you have bad credit, you may still be able to qualify for the loan funds you need.
How Your Credit Rating is Determined
First, it is important to understand how your credit rating is determined. There are three main credit reporting bureaus, and these bureaus regularly obtain updated information about your financial situation. This may include factors like outstanding principal balances on loans, if you are making your monthly payments on time and in full and when you apply for a new credit account. Court rulings, such as judgments in a civil lawsuit, as well as collections accounts, bankruptcies and more may also appear on a credit report. More weight is given to recent credit history, but a negative event that happened even a few years ago may still have an impact on your credit rating. By making your monthly payments on time and in full and by paying down outstanding balances, you may gradually see a lower credit rating improve.
What to Do If You Have Bad Credit
Some people have bad credit because of financial irresponsibility, but others may have been negatively impacted by a divorce, the loss of a loved one, the loss of a job and other factors beyond their control. Regardless of the reason why you have bad credit, you may find that some lenders will turn down your loan request. However, there is still hope available for getting the funds you need. While most lenders will place weight on your credit rating when making a decision about your loan request, some lenders offer loan programs specifically for borrowers with lower credit scores. When you seek out these easy installment loans, you can improve your likelihood of having your loan request approved.
Many people will experience a decline in their credit rating at some point in their lives, and these are times when the need for extra cash from a loan may be more urgently needed. While a poor credit rating can make it more difficult to obtain an installment loan, rest assured that you may be able to find the right loan program with some effort.