Are Personal Loans for Bad Credit a Good Idea – Bad Idea

A brief description and/or the scenario of having a bad credit is already an indication that making a personal loan is one of the worst decisions you’ll ever make in your financial life. Not only that it is a bad idea but it’s quite risky as well. Basically, having a bad credit means that your financial status or the way you are managing your finances is currently at its worst level.

It’s your credit rating, report and history whereas you would know how good or bad your financial management is, and how consistent you are in paying what you owe, typically in the government, bank or company. Stuff like inconsistent payments, bankruptcy, not paying your past debts, and overusing your credit card are some of the causes that can lead you into having a bad credit report. There’s also one major downside of experiencing a bad credit rating and most likely, it will result into the denial of future credits.

Now let’s define what personal loan is. It is basically a kind of loan that creates a consumer credit which is meant for personal use such as for traveling, personal occasions, and other personal stuff you would buy. But here’s the most striking part: “A personal loan is actually based on the consumer’s standing when it comes to his/her income (or ability to pay) and most of all, his/her CREDIT HISTORY.” So let’s enumerate some of the reasons why personal loan is such a bad idea in the midst of having a bad credit.

1.) Since you have a low credit rating, people may lose trust in you and (like I said earlier) this will result into the denial of credits that you would create in the future. Thus, decreasing your chance of having a personal loan.

2.) Personal loans usually comes with higher interest rates and they would typically propose just a short amount of time between the day you’ve made that loan and the consumer’s deadline of payment. Having a bad credit will definitely and negatively adds-up to the kind of hassle this will bring into the part of the consumer.

3.) Some personal loans may require a continual use of credit, and since you have a bad credit report, you may not be able to cope up with all of the finances that are involved in this type of continuity. Obviously, this will lead into another form of bankruptcy, which will worsen your credit report even more.

As a conclusion, if you really want to create a personal loan for yourself and your family, my suggestion is to revive your credit report first. Pay attention to it and create a plan on how you can lift it up. Keep in mind that having a low credit rating will not just hinder you in personal loans but it can also affect the way you would handle your other financial responsibilities in the future. So before making a big leap in your financial life, make sure to take away the hassle first and that is, bad credit!