Bad Credit Loan
Getting a loan with a poor credit rating
Bad credit is a parasite: it attaches itself to your name and follows you anywhere you go, eating and clawing away at potential business deals and personal loan transactions. But even if you have bad credit—usually because of previous issues in paying off a loan, making late payments or filing for bankruptcy—getting a loan is not impossible.
In fact, some financial institutions specialize in providing loans for people with bad credit, even when other banks refuse to do so. However, those interested in getting one of these high-risk loans should be aware that they often come with higher interest rates, in order for the lender to recoup some of its losses should you default on the loan. In addition, these banks and financial institutions tend to loan less credit than a regular bank might provide to someone with a very good credit history.
Bad Credit Loan Types
Two different types of loans are available: secured bad credit loans and unsecured bad credit loans. Secured bad credit loan is a loan provided to someone who can back up the loan with their own assets. This means that if a person with bad credit owns a house, they will need to use that house as collateral in order to secure a small business loan for a loan towards buying a car. An unsecured bad credit loan, on the other hand, has no need for collateral but the interest rate may be particularly high. Secured credit loans are much more common because the lack of collateral in an unsecured credit loan often represents too great a risk for the lender.
The good news is that bad credit business loans and bad credit personal loans can help an individual repair their credit history. So long as each payment is made in full and on time, your credit rating will steadily improve over the course of months and years. In many ways, people with bad credit should look at a new loan, even a secured credit loan, as a bad credit repair opportunity—a chance to rebuild their credit and prepare for future business transactions.