All conventional lenders lump Individuals with a 550 credit score and any numbers below that points as people with bad credit. If you’re one of them, you cannot walk into national banks and apply for a personal loan since they will reject your application right away. Although the sky seems not filled with bright stars, there are still options available for people with poor credit scores to obtain loans. There are lenders specialized in bad credit loans which are willing to give you a hand and offer loans to people who don’t qualify for traditional types of loans. They don’t put much emphasis on individual credit score. Instead, they take other factors into their considerations such as your proven income, employment status, and your overall financial standing.
The options come with a couple of consequences though: your loan option is limited, and you need to pay your debt with significantly higher interest rates than those paid by people who have excellent credit scores.
If you apply fora long-term loans with them, you will get rates that can be three times higher than conventional personal loan rates. Short-term personal loans such as title loans and payday loans will fetch even higher rates if you have a credit score of 550 or less.
Types of loans for People with Bad Credit
If your credit score is at or 550 points or here are types of loans you may want to consider :
Payday loan: it is a short-term small unsecured loan given by lenders which you need to pay in full on your paycheck day. In most cases, the credit comes with very high annual percentage rates (APR). You should take this type of loan as the last option if an emergency occurs or you need fast cash. Many states have enacted legislation banning the payday loans entirely because of the assumed predatory nature of some unscrupulous lenders.
Title Loan: It is a type of secured loans where you use your car as collateral for your loans. If you take out a title loan, you let your lenders place a lien on your car title. This type of loan also is a short-term loan where you need to pay the loan within 15-30 days and carry similarly high rates compared to a conventional loan. Lenders often charge somewhere between 25-30% rates on a car title loan, much higher than another type of loan.
Cash Advance: If you own a credit card you can use it to withdraw cash from ATMs. You will incur a 3-5% on of the amount of money you withdraw. The rates your bank charges on a cash advance is often higher than conventional credit card transactions. The rates on cash advance compound daily from the day you take the money.
Installment Loans: it is a type of loan where you repay your loan over time by regular payments on principal and interest. The installment loans carry lower rates than payday and title loans.
Try Improving Credit Score Before Applying for Bad Credit Loans
Considering these financial troubles a low credit score can cause you, you may want to consider improving your credit score first before taking out a loan. If you don’t desperately need the money, you can build your creditworthiness over time. One of the options you can take to improve your credit score is by applying for a small, secured loan from Credit Union.
Credit union is a nonprofit organization that works much like a cooperative which offers the so-called credit builder loans. The loans are designed to help its members rebuild/repair credit over time. To be eligible for a credit builder loan you need to be the member of the organization. The loans will be deposited into your savings account and used as collateral. You cannot use the funds until you repay all the loan amount deposited into you saving account. Credit Union will report your monthly payments to credit bureaus. Thy will take the payment history submitted by Credit Union as the basis for their judgment on your credit rating. You should be able to improve your FICO credit score over time, of course, it takes time and patience.
Other essential things you need to do to improve your credit score is checking your credit report regularly, if you find any errors in it dispute them immediately with the credit reporting agencies.
Legit Personal Loan Lenders for People With Credit Score 550 and Below
If your credit score falls within the poor score ranges, it does not mean that you should give up on finding financing options. There are few lenders that are willing to give people with poor credit a personal loan. Such lenders will typically look at your ability to repay a loan instead of simply digging into your credit report.
Bellow are two lenders that are willing to give personal loans to people with a credit score under 550. The types of loans, rates, and fees vary from one lender to another.
RISE Credit: Quick Review
Rise credit is a legit option for people with bad credit. They will let you know exactly how much you’ll pay for the loan before you put a pen to a contract. The good thing about getting a personal secured loan from the company is that they don’t have hidden fees and prepayment penalties. To qualify for the loan, you need to: be at least 18 years old, have a proven source of income, valid email address and a checking account.
Rise Credit: Pros and Cons
The Pros :
Quick and easy approval. The application process only takes minutes to complete. Depending on your overall financial standing, you will get the funds deposited into in your bank account in as little as one business day.
A better alternative than a payday loan and installment loan: Rise offers loan term that extends up to 26 months
Generous credit line. The loan amounts you can get vary from $500 to $5000 depending on the state where you live.
Lower rates for returning customers. You could be offered better APRs as a returning customer with good payment history. After making 24 months of scheduled monthly payments, you could see a 50% drop in your rate of future loans.
No prepayment fees. RISE Credit allows you to pay off your loan or in advance early with no extra charges.
The Cons :
Only available for US citizens living in 15 states: Alabama, California, Delaware, Georgia, Idaho, Illinois, Missouri, New Mexico, North Dakota, Ohio, South Carolina, South Dakota, Texas, Utah and Wisconsin.
High interest rates: Rise offers APRs that range from 36% to 365%, with origination fees and late payment fees that vary from state to state.
NorthStar Loans: Brief Review
Another personal loan lender for people with bad credit scores you might want to have a look is NorthStar Loans. The company offers a fast cash advance need of customers and installment loans.
The company offers two main benefits. Firstly, you have access to multiple lenders by completing just one online application form. Secondly, you can use the unsecured loans from them for anything you want, home improvement projects or even car repairs. And with fast financing, you can receive your funds in just one business day. NorthStarCash also works with lenders who extend loans to people with low credit scores. To qualify for the loans from NorthStar, you need to have a job, proven income and savings account.
Best Personal Loan for Those With 550 credit Scores or Less
There are few lenders that are willing to give personal loans for people with credit score 550 and below that point. The loans you will get typically come with much higher interest rates than conventional personal loans.We have been doing a comprehensive research into several loan offers from lenders that specialize in loans for bad credit and come to the conclusion the personal loans offered by Opploans are the best option you might want to consider. Here are the highlights of their offer:
- APR: 56-199%
- Loan Amount: $500-$4000
- Direct Deposit required in order to be eligible for the loan
Opploans currently caters to applicants from the following states:
Alabama, Alaska, Arizona, California, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Wisconsin, Wyoming.