How to get an Unsecured Loan when you have Bad Credit

There are hundreds of lenders falling over themselves to offer unsecured loans to people with bad credit, but they may well not be the lenders you would choose from preference. Nevertheless they are out there and have a loan waiting for you with only the quickest of checks to ensure that you have a regular income and a current bank account. Your credit score is indicative of your previous credit history, and they are banking on your future ability to pay, not any previous mess you have left in your wake with unpaid bills.

It’s an interesting state that those who have no credit history at all often end up treated by traditional and reputable lenders in the same way as those with bad credit, simply as they have no credit history to be assessed. Typically students who need a private loan to top up their federal student loans are unable to acquire an unsecured personal loan and would be of no interest to the less reputable lenders. This is fortunate as students may otherwise be tempted to apply.

The only option open to students needing an unsecured personal loan after obtaining the federal guaranteed secure loans, is to persuade a third party to endorse their loan. This is a risky venture for any co-signer who is then putting their own credit score on the line.

Traditional lenders will not be interested in advancing an unsecured personal loan to those with bad credit as the risks of default are too high. The only alternative to those who need a loan is to consider the expensive alternative of one the many lenders who specifically advertise that they deal in bad credit loans. If the loan is so necessary to you that you are prepared to pay the much higher than average interest rates, then these loans are extremely easy to obtain with the minimum of paperwork. Instant decisions will be made on line.

If you are considering this type of loan then you should really shop around and compare interest rates, repayment terms and fees. Check if the interest rate is variable or fixed, and ensure that there is no early repayment fee involved. Ask if your repayments to the loan will be recorded with the credit bureaus. If you are looking to obtain an unsecured loan to consolidate your debts and reduce your overall number of creditors, then a loan can be used to pay off outstanding debts and if the loan payments are reported then you can begin to improve your credit score immediately.

As a consolidation tool unsecured loans can work to your advantage, but ensure you are not just replacing one stack of debt with another, and that you understand all the terms and conditions of the loan. Used astutely an unsecured loan can help you to get back on your financial feet and improve your credit score at the same time, without the additional worry of losing any collateral.