Good credit, bad credit, and no credit; for the most part we know what these mean, but there are a few peculiarities about each. Plus, the condition of your credit may be a mystery if you don’t have much of a credit history.
The condition of your credit is determined by your payment history on credit cards, rentals, loans, utility bills and so on. But it is also a function of time. If you, at some point accrue either very good or very bad credit and then forgo buying anything in a way that would affect your credit, after a few years your credit would go to zero. This means you essentially have no payment history.
While having no credit history might sound better than having bad credit, it’s not. The truth is, having an imperfect payment history is looked upon more favorably than having none at all. Having a very low credit score is worse, of course, but then, either way, no one is likely to extend any credit to you.
If you have no credit and apply for a home loan, the advice you are likely to get is to go out and apply for a credit card or two, use them for a year to establish a payment history and then re-apply for the loan. If you have bad credit, the lender will still turn you down, but it will take much longer to restore your credit.
Many lenders may lend to someone with a negative credit score, if the low score is not abysmally low, or if there were mitigating circumstances involved in creating the low score. So, with low credit, you can benefit from the fact that at least the lenders have some data on you to work with. Those with no credit history are simply too mysterious for lenders to touch.
People who have trouble securing loans due to bad or zero credit may go to some extreme measures to get loans. It will require taking on some risk and really buckling down to repair bad credit- but extreme caution is called for when climbing out of the credit hole.
Bad Credit Loans
A bad credit loan can be a way to establish a positive credit history, but they come with some downside. First, they can have extremely high-interest rates which may prove impossible to keep up with. Second, many bad credit lenders do not report to credit agencies, meaning you won’t actually be repairing your credit. securing a loan can be difficult. But there are a few agencies that are willing to work with customers with imperfect credit. At BetterLoanChoice.com, borrowers with bad credit can secure a personal loan with bad credit, depending on individual circumstances.
A payday loan, or cash advance, is a short-term loan that you must repay with your next regular paycheck. Interest rates on these loans can be astronomically high. Usually taking a loan is about using the time allowed for repayment to build some equity with the loan, making the loan worth more to you than the amount you end up paying. With short term loans, you don’t have time to invest in anything, which means chances are, you’ll be worse off when it comes time to repay it. Payday loans should only be used with you’re waiting on a big influx of cash and you have no other option in the meantime.
Whether you have bad or no credit, some lenders may be willing to lend to you, but will charge extremely high-interest rates in exchange for the risk they are taking on by extending credit to someone with a poor payment history. If you have no other choice, and you determine that you can afford to make the payments, these may be a good opportunity — just beware of those high rates.
Unsecured Personal Loans
These loans are given based on the borrower’s credit rating. Unsecured loans are given without the need to put up any collateral to secure the loan. Unsecured loans have the best interest rates, often because borrowers usually must have very good credit ratings to get them. These loans are the easiest to repay, as rates tend to be the lowest, and their being unsecured means they have a lower barrier to entry.
Check Your Credit Fast
By going to FICO.com, you can obtain a summary of your credit history. There are other easy ways to check your credit so be sure to check it periodically.
This information was brought to you by BetterLoanChoice
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