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Need Unsecured Loans Bad Credit Rating or Not?

Do you need a loan? Do you need money for vacation, home repairs, to get a new car, pay tuition, or get caught up on some bills? Does every major loan company turn you down? Is your credit rating causing you to get turned down by every creditor you apply too? Do you even know your credit rating or how loans work? This knowledge can help your financial future more than you realize. Learning all about the credit game can help you improve your credit score and get loans in the future.

Credit Frequently Asked Questions:

What is considered a good credit score?

1) Above 730 Excellent credit.
2) 700-729 Good credit.
3) 670-699 Lender will take a closer look at your file.
4) 585-669 Higher risk; you will not be eligible for the best rates and products. Credit products may not be available.
5) Below 585 Credit options will be limited or not available. Lender will need to consider other information in your application.

What determines my score?

Late payments, delinquencies, bankruptcies: After 30 days late, your delinquency is reported to the credit bureau.
Outstanding debt: The more debt you have, the less likely someone will give you more.

Length of credit history: The older your history is the better chance you have of getting more credit. Creditors don't want to take a risk on someone with new credit.

Types of credit in use: Some types of credit, including credit cards, provide you with a credit line greater than the amount you have already borrowed. The more credit available, the greater the risk to the lender since a borrower can easily increase their outstanding debt.

New applications for credit: Frequent credit checks by lenders may indicate that a borrower is looking to increase his or her amount of debt. Each time your credit is checked, your score goes down!

How do I get an unsecured loan with my bad credit score?

The first thing you need to do is improve your credit rating score. You can do this many ways. The most common way is to get a secured credit card. Your credit limit is equal to the deposit you put on the card. If you put $300 on a card then you have $300 in credit. You charge stuff on the card and pay the bill when it comes in. Many secured cards will even give you credit limit increases after 3 consecutive on time payments. They report your good credit to the credit bureau and this in turn increases your credit.

Some banks specialize in giving bad credit loans. They will offer you a small amount of money, sometimes as low as $50 and charge you a high interest rate. If you pay it back they increase you available credit the next time you apply for a loan with them. If you continue to keep a good track record with them, they will be more likely to give you a bigger loan when you need it. They also report to the credit bureau so it improves your credit rating. That in turn makes it much easier to get an unsecured loan with a bad credit rating.


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