Online loans are a very popular way to get access to cash in times of need. With these online loans, you can get any amount and repay over a particular period prescribed by the lender. Compared to bank loans, getting online loans can be easier, and depending on the type of credit you receive, they generally attract lower interest rates without collateral.
However, most online lenders try to assess the credit trustworthiness of their intending customers before disbursing loans. As a result, they typically ask for your credit score before approving any loan request. If you have a bad credit score, it may reduce your chances of securing loan approvals or make you susceptible to relatively worse repayment terms.
There are special loan types that you can access if you have bad credit. We explore some of them in this article. You’ll also discover if online bad credit loans can help improve your credit history.
Are There Online Loans for Bad Credit Borrowers?
Ideally, with a bad credit score, your loan options are largely limited. However, some online lenders create special credit facilities to cater to the needs of customers with a poor credit history. Bad credit loans, as they are popularly called, allow you to enjoy funding even if you have a poor credit history. You can search online loans for bad credit from WeLoans.
Lenders who offer online loans for bad credit borrowers still need some assurance that you can repay your loan. As a result, they request proof of your employment or proof of stable income. This is the guarantee that you can repay your bad credit loan.
One good thing about bad credit loans is that they can be useful for maintaining or building your credit profile. Firstly, lenders perform a soft credit pull to ensure that there’s no negative impact on your credit score when you apply for a loan. Also, if you are able to repay early and the lender reports it, it will improve your credit score.
Eligibility Requirements for Bad Credit Loans
As a general rule, bad credit loans are created for borrowers with a poor credit history. However, not all bad credit borrowers will be able to apply for or receive funding. An expert financial writer named Eric Bank from WeLoans, suggests that each borrower is supposed to be eligible for a loan before any loan applications.
Eligibility requirements for bad credit loans may vary depending on the lender. Here are some general requirements that you may need to meet in order to qualify for a bad credit loan.
- Employment and income: Lenders may require you to have a steady job and a certain level of income in order to qualify for a loan. This helps them to assess your ability to repay the loan. In place of income from employment, other types of income like alimony, social security benefits, or pension payments may suffice.
- Age: Some lenders may have age requirements, such as requiring you to be at least 18 years old in order to apply for a loan. It is also necessary to provide a valid government-issued photo ID to serve as evidence of your age.
- Residency: Many lenders require intending borrowers to be citizens of the United States. In place of this, you may need to show that you are a resident of a particular state to qualify for a loan.
Where to Get Online Loans for Bad Credit?
Different financial institutions offer online loans for bad credit borrowers. If you have bad credit and you’re looking to get a suitable loan online to meet your needs, here are some options you can try.
Many online lenders offer loans to people with bad credit. These lenders may have more lenient credit requirements than banks. You also have the pick of the litter in terms of different loan types available at lenders online.
Credit unions are nonprofit financial institutions that often have more flexible lending practices than banks. You may be able to get a loan with bad credit through a credit union. One downside to credit unions is that you have to be a member to access their credit facilities.
Peer-to-peer Lending Platforms
Peer-to-peer (P2P) lending platforms match borrowers with investors who are willing to lend money. These platforms may be more likely to lend to people with bad credit than traditional lenders.
Online brokers such as WeLoans can connect borrowers with a network of direct lenders. They may be able to help you find a lender who is willing to give you a loan with bad credit. Brokers allow you to compare different loans before making a selection.
Can Bad Credit Loans Build My Credit Score?
Taking out a bad credit loan and making timely payments on it can help to improve your credit score. When you make on-time payments, it demonstrates to potential lenders that you are responsible and can be trusted to make payments as agreed. This can help to improve your credit score over time. However, it is important to keep in mind that missing payments or defaulting on a loan can also have a negative impact on your credit score.
Process of Applying for Bad Credit Loans
When seeking a loan for those with poor credit, the first thing to do is to choose a lender or broker to apply to. One option is WeLoans, a broker that can connect you with several reliable lenders and provide you with various loan options. Here is how to apply for and get approved for online loans for bad credit on the WeLoans website.
Submit an Online Form
Fill out the online form available on the broker’s website. Ensure that information like your name, age, bank account details, and credit scores are accurately provided.
Receive Multiple Offers
The broker will forward your information to online lenders within its network. In turn, you will receive several offers from these lenders. Examine each one and only agree to one that has favorable terms.
Expect Funds in Your Account
Once you sign the necessary documents, you will receive the cash in your bank account. Depending on your lender, it may take between one to two business days for the funds to be deposited to you.
With bad credit loans, individuals with poor credit scores can have access to funding without harsh consequences. Nevertheless, it is important to pay close attention to loan terms before agreeing to any. Being careful will prevent you from predatory lenders or unfavorable loan terms that could drag you into a debt cycle.