Kamis, 02 Februari 2012


Though it has been a long time since the sub-prime crisis, people are still reeling under its after-effects. People who are in dire straits and need a loan desperately have a ray of hope as they can still avail low credit score loans. These are specially designed for people with low credit score. There are several companies which let people avail these loans by putting collateral up against them. These can be taken by anyone who has a bad credit history.

Today, lenders have realized the fact that not everyone applying for a loan will have a fabulous score. People used to have a bad score in the past as well, but, due to recession, many people were left unemployed, which in turn made it difficult for them to pay off their existing loans. This impacted their credit score and there are a lot of people who haven't recovered yet.

The best way to apply for these loans is through online websites of different financial companies. Most people prefer this way of applying for a loan, as it helps you to compare the interest rates of various companies. Depending upon your credit score, you may be eligible for a secured or an unsecured loan. These loans usually come with high interest rates. In a secured loan, the lenders will ask for some guarantee such as real estate, mortgage, jewelry, etc. In case you fail to pay the monthly installments, the lender can claim these things. In an unsecured loan, the lender may not ask for a collateral but will charge you heavy interest rates. If you have a bad score, you can also apply for restricted credit cards, but you need to extra careful about, because as we mentioned earlier, they all fall in the category of high risk loans.

Home Loans
  • Try to put a higher down payment. Because of the credit history, lenders will always be looking at higher security. If you put forward a higher down payment, you will enhance your chances of getting the loan approved and this will also help in curtailing the duration. Even if you have to wait a few more months to save for a higher down payment, it will certainly be beneficial to you as you will be getting the loan at lower interest rates.
  • Having a bad credit also means that the lender will be putting other things such as the time you have spent with your employers, your monthly income, etc., under greater scrutiny. So, if you have joined your current organization recently, hold on for a year or two before applying for a home loan.
  • Make sure that you pay your all of your bills on time so that there is a continuous improvement in your score. Lenders also check your current track record, so it becomes important to plan out your liabilities.
Student Loans

Students are generally looked upon as a high-risk group as far as lenders are concerned. Reasons are plenty, the most obvious being that they are not working professionals. While lending to a working professional, a lender at least has an assurance that the person can devote all his time and energy in earning money, but in case of students a bad credit history, even this factor is ruled out as students mostly work part-time and the money that they get does not suffice to pay off the loans. In this scenario, most of the lenders ask for a cosigner - a person with a stable source of income who will share the responsibility of paying off the debt in case the student is unable to do so. Parents or grandparents are preferred as the documentation becomes a lot easier. This way students can secure a loan. But, students are always advised to avoid taking these loans and apply for federal government loans or scholarships.

One has to make sure that one is using these loans in the best possible manner so that one comes out of this financial quandary. One of the highest risks is that if one does not plan out the debt payment, the credit score takes a further hit and the person falls in a vicious financial cycle. While the thoughts of getting a low credit score loan looks exciting, one should think about all the pros and cons before applying for one.

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