Many money lenders prefer to lend money to borrowers with high or good credit scores, which makes it challenging for people with bad credit, however, if financial havoc suddenly appears, there are options available to get fast cash for people with a credit score of 550 or less.
What is a Good Credit Score?
Most money lenders use the FICO® credit scoring system and there are five main categories of scores which range from poor to excellent.
|Excellent||800 – 850|
|Very Good||740 – 799|
|Good||670 – 739|
|Fair||580 – 669|
|Poor||300 – 579|
Often, people who have better credit scores will have access to more loan types, ranging in lower to higher values and with better interest rates, than those with a poor credit scores.
What Types of Loans Can I Get With a Poor Credit Score?
As mentioned, there are limited options for people with a bad credit score, however, the following loan types are often considered by money lenders:
Payday Loans for People With Bad Credit
Payday loans are notorious for accepting people with bad credit, as they usually have less stringent borrower requirements and do not do a full credit check. Payday loans are short-term high-interest loans that are expected to be repaid when a person receives their next paycheck, hence the name payday loan. They are heavily regulated across every state in the U.S., and even banned in some, however, they are often granted quite fast and allow people facing a financial emergency the opportunity to get access to fast cash.
Who Can Get a Payday Loan?
Usually, anyone who is over the age of 18 and who has a source of income will be able to apply for a payday loan in the U.S., however, as mentioned, payday loans are not universal and each state has their own laws and regulations. You can usually apply for a payday loan through an online lender and will likely be approved within the same day, but it’s important to note that they are extremely high-risk loans and if not managed well, can lead a person into a financial debt cycle.
Secured Loans for People with Bad Credit
Another option for people seeking a loan with bad credit is secured loans, as they do not consider a person’s credit score, but instead whether or not they can pledge collateral, such as a car or home. Although this option can be useful for people with limited, or bad credit scores, it’s essential to consider the risks associated with the loan, as borrowers face the possibility of having their possessions taken away.
Who Can Get a Secured Loan?
Anyone who is over the age of 18 and who has sufficient collateral to their name will be able to apply for a secured loan. Some forms of collateral that are accepted are cars, homes, and stocks, among other valuable assets. Borrowers might also have to meet other criteria, too, such as having a steady income. Just like any loan, it’s important to read the loan terms and conditions and ask any questions before making the application, to prevent unwanted fees in the future.
How to Improve your Credit Score
Another alternative is simply taking the time to improve your credit score so that you can apply for loans more easily and be offered better terms and conditions. There are some easy steps to take when considering improving your credit score, although, this is a timely process and might not suit people seeking immediate financing for emergencies. Here are our top 3 tips for improving your credit score.
- Consolidate your Debt
By consolidating your debts, you might save money on high-interest rates, but also reduce the risk of missing repayments, in turn, increasing your credit score.
- Low Credit Utilisazation
Be sure to use a low percentage of your credit given, ideally, around 50%, as this will increase your credit score and make you more desirable to money lenders.
Check your Credit Report
You can request free credit checks, usually once or twice a year, where you will have the opportunity to review the report and amend any mistakes. Be sure to also double-check check your address and other personal information is correct, as this can also negatively affect your score.