Many of us find we need to borrow money at some point or another. Whether it is a big loan like a mortgage or a smaller loan to cover car or home costs. The amount you can borrow in Tennessee depends on the type of loan you take out and could also be affected by your credit score. Here are a few examples of loans available to most credit scores:
- Payday loans – Maximum loan: $500
- Bad credit loans – Usually $250-$500
The amount of money you can borrow in Tennessee will in large part depend on factors like your credit score, employment status and even the type of loan you wish you apply for. Some loans may allow you to apply to borrow a larger amount than others, whilst others may be designed for specific purposes, like debt consolidation or people with bad credit scores. It is important to understand the types of loans in Tennessee that you can apply for, to determine what type of loan and for how much may or may not be suitable for you.
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Payday Loans in Tennessee
Payday loans are a fast and easy way to borrow a small amount of money for a short period. A poor credit score is not usually a barrier to borrowing money from a payday lender. Although, because of the increased risk this poses to the lender, interest rates tend to be high.
In Tennessee, you can borrow up to $500 using a payday loan. The limit is designed to encourage responsible borrowing and protect customers from getting into a spiral of debt. There is also a limit on the time you can borrow this money; no more than 31 days. There is also a cap of fees, no more than 15% of the amount borrowed, meaning the most you would pay in fees is $75.
Bad Credit Loans in Tennessee Explained
A bad credit loan is designed to give borrowing options to those with a poor credit score or credit history. Although there is no state-legislated maximum loan size for a bad credit loan in Tennessee, most lenders tend to offer between $250 to $500 loans as the initial loan amount. Always remember with bad credit loans that if you need a loan specifically for a bad credit score, it is very likely that the charges and interest rates applied to these loans will be higher than for other, higher credit score options. Lenders will charge higher fees and apply higher interest rates to mitigate the higher risk of lending to people with bad credit.
What Other Loans Are Available to Me in Tennessee?
As well as payday loans in Tennessee, there are a vast range of loans from online and traditional lenders. Available loans include mortgages, auto and title loans, short term loans and guarantor loans. These loans are much more dependent on your credit score and your need for a loan and some options are secured rather than unsecured.
What Is a Credit Score?
A credit score is a number between 300–850 that shows a consumer’s creditworthiness. Banks and lenders will look at your credit score to gauge how likely you are to be responsible with the money they lend you. The higher your credit score the lower risk you are, and the better rates will be available to you. In Tennessee, much like other states in the US where payday lending and other forms of short term lending are available, lenders will look at a borrower’s credit score to assess their creditworthiness and ultimately, the lower your credit score and the worse your credit history, the harder you will find it to find a loan with lower fees.
Why Does My Credit Score Affect How Much I Can Borrow?
The lower your credit score the fewer borrowing options you are likely to have. A high credit score means lenders can be fairly certain you will be responsible with the money you are leant. As such, you may be able to borrow more money at a better rate of interest with a higher credit score. Those with poor credit scores tend to have fewer borrowing options or may be able to borrow less. This is why many borrowers with poor credit scores opt for a payday loan or a bad credit loan.
What Can Affect My Credit Score?
Here are a few examples of actions that will negatively affect your credit score:
- Frequency of setting up new accounts
- Frequently applying for more credit
- Missing payments on loans
- Being close to your credit limit
- Having limited or no credit experience
- borrowing more than you can afford
How Can I Build a Good Credit Score?
If you find your credit score and are less than impressed there are a number of viable ways to improve your credit score:
- Join the electoral roll – The quickest and easiest way to improve your credit score costs nothing, you just need to register on the electoral roll, even if you live at home or in shared accommodation. This is crucial to building your credit history as lenders can use it to confirm your address
- Open a bank account – Having a bank account that you manage well shows lenders that you are stable and financially reliable. If your account has an overdraft make sure you don’t stay in it. Ideally, you should use no more than 25% and pay it off as quickly as you can
- Get a credit card – Getting a credit card can feel scary for those who aren’t confident about their finances, but it can be a great choice for your credit score. Make sure that you always pay it off on time and in full each month. Don’t let your spending get away from you. This will help you to build a positive credit score and show lenders you can reliably pay off debt
- Manage your household bills well – Keeping up to date on your utility accounts, like your water, electricity and gas, can help you to build a positive credit history. This is another way that lenders can see that you are responsible for your money. Even just paying your rent on time can improve your score