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Bad credit loans are loans that take a consumer's low
credit rating into account when setting rates & terms.
Lenders refer to loans that fall into this category as
"subprime."
Your fico credit score decides the types of loans for
which you qualify. Typically, scores under 600-620 are
considered subprime. Certain lenders specialize in subprime,
or bad credit loans. Others offer all types. In all cases,
bad credit loans cost more than conventional loans, with
much higher interest rates, higher down payments and higher
loan origination fees.
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The Right Way to Use Bad Credit Credit Cards
Millions of Americans have suffered from credit problems.
If you've experienced them yourself, one of the best steps
you can take is to open an account for a secured credit
card-you could call these bad credit credit cards.
Secured credit cards are offered in exchange for a certain
amount of your cash held as collateral in case you don't
pay. Then, starting with low credit limits-a couple hundred
dollars, for example-users slowly re-establish a positive
payment history without getting in over their heads.
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Quick Tips on Bad Credit Auto Loans
If you're in the market for bad credit
auto loans, you're not alone. There's a booming subprime auto lending business
going on.
Does this mean many more consumers who need bad credit
loans today? Not entirely. Subprime financing has come
into being with the use of the fico credit score. Lenders
use credit scores to predict quite accurately what percentage
of borrowers will default on loans at each credit scoring
level. For example, at below 500 points, more than 80%
of borrowers default. At 700 points and up, only a small
percentage of borrowers default.
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Costly Cash: Bad Credit Personal Loans
Personal loans are unsecured, not requiring collateral.
Most of the time, applying for bad credit personal loans
is not much more difficult than applying for a credit
card. But with two key factors working against you-bad
credit and the loan being unsecured-your interest rates
will probably be through the roof.
That said, even a bad credit loan of 20% interest rate
on $5,000, paid over 5 years, may be affordable when broken
down to monthly payments, and just what you need to help
cover an emergency.
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