How to Choose a Bad Credit Loan Provider
If you’re in need of a bad credit loan, you should expect quite a number of sketchy strangers to come calling for your business. They’ll promise they’ll give you cash right here right now, and that comes a credit check. And though that all might seem fantastic in the moment, you can be mighty sure there’s a catch–through the roof annual percentage rates (APRs), short payoff terms, and an entire future of debt rollovers.
If you’re in dire need of a bad credit loan, it is possible to do it safely. When choosing a lender, make sure they:Before you select a lender, ensure that they:Before deciding on a lender, check if they:
Consider your capacity to repay
Your capability to repay your loan is the most critical factor that must be considered by both you and your lender, before you borrow any cash. While a vulturous lender will want to trap you with a quick-term, high-interest debt that you can’t realistically repay (setting off a toxic pattern of re-borrowing at the cost of more interest and fees), a scrupulous one will check your income and review your bank statements before deciding to approve or deny your application based on your demonstrated ability to repay .
Conduct a soft credit check
You can trust that if a lender isn’t going to take a look at your credit at all, they aren’t going to bother whether or not you can repay your loan. If your prospective lender doesn’t plan on checking your credit whatsoever, run. As well, steer clear of loan providers who perform hard credit inquiries, which alert credit bureaus and can hurt your credit score. These credit inquiries, which require your consent, are run by loan providers or credit card companies and will reflect on your credit report for a maximum of two years.
Instead, go for a lender that only runs a soft credit inquiry, otherwise known as a soft credit check, which will not affect your credit score in any way. In contrast to hard credit checks, soft credit checks may be performed without your consent. Such “light” checks may be performed by landlords, employers, loan companies and even by borrowers themselves.
Forward payment reports to credit bureaus
Finally, we already know who bad credit loans are for – people with bad credit! Which means, when you repay a loan with a lender that reports payments to the credit bureaus, you are actually improving your credit score over time! If the lender reports on-time payments to credit bureaus, you can use your current loan to meet your short-term financial needs and work on restoring your good credit in the long term.