Loans for People with Bad Credit

Is it possible for people with bad credit to get loans in their name?  You’d think not, wouldn’t you?  After all, people with bad credit have a history of not paying off previous loans which makes them bad credit risks – right?  They’ve gotten into trouble with credit before and there’s no place out there that will loan them money with a bad credit history – right?  Well, that’s partially right.

Secured Credit Cards

For people with bad credit, credit cards can be the bane of existence. However, there are legitimate reasons for wanting a credit card.  First, they are helpful in emergencies.  For example, if you should get stranded by the side of the road with car trouble, a credit card can get you a tow truck quicker than if they have to bill you.  Having a credit card with bad credit can also help get you back on the road toward good credit provided you use it wisely.

Just so you can’t get into too much trouble with a credit card while you have bad credit, we recommend that you get a secured credit rather than try to apply for a standard credit card. With a secured credit card, you deposit a certain amount of money into an account that is tied to that card.  You can then use your card just like you would a regular credit card.  The good part about a secured credit card is that once you’ve reached the amount of that deposit, you can’t use the card anymore until you deposit more money.

Even if you have bad credit, you might also be able to secure a department store credit card.  Many department stores will offer you a credit with a low limit even if your credit isn’t stellar.  Of course, the big thing here is to make your payments on time and don’t overextend your credit.  It’s credit suicide to get a card, charge too much on it, and then miss payments or be late on payments.

Unsecured Credit Cards

An unsecured credit card is the exact opposite.  They offer a credit line to people based on their credit history and then allow charging up to that credit limit.  They are generally given to people with good credit histories and a past demonstration of being able to pay their bills in a timely manner without over-extending their credit.

So how can people with bad credit get an unsecured credit card?  Because there are companies out there that specialize in giving unsecured credit cards to people with bad credit.  Their thought is that even people with bad credit deserve the chance to rebuild their credit somehow.

However, let’s think about what having an unsecured credit card really means to you if you have bad credit.  First, you are getting a credit line with a “real” credit card that can help build your credit.  As you pay off your balance every month, you are building a solid credit history and your credit line could be increased incrementally.  The annual fees might actually be dropped as well eventually.

Mortgage Loans

There are companies who offer many different types of mortgage loans for people with bad credit, but like other companies like these, the loans are probably going to be at a high interest rate, so you’ll want to thoroughly check out all programs available to you.

The Federal Government even knows that people with bad credit can still pay a mortgage and they are willing to help out with government subsidized loans like FmHA that is a mortgage loan based on income.  Actually, these types of mortgage loans are perfect for people with bad credit because it gives them not only a home, but a payment they can afford and the chance to rebuild their credit.

The key here is to do your homework and look around for a mortgage company that specializes in mortgage loans for people with bad credit.  There are companies out there that will offer up credit to you albeit at larger interest rates than a regular mortgage, but the important thing to remember is that it is possible.

Veteran’s Administration Mortgage

Our government does a lot for our veterans of the armed forces, especially through the Veteran’s Administration.  They offer a variety of services to veterans and that even means a VA mortgage loan for veterans with bad credit. Just like with other bad credit mortgage loans, the interest rate might be a little higher than a conventional mortgage loan, but it will be possible for you to get a loan to buy a home.

If you are a veteran or the close relative of a veteran and you have bad credit, all you need to do is contact your local VA and let them know you are looking for a mortgage loan.  You will have to go through an interview process and, of course, fill out the necessary paperwork.  Then they will look into your credit to see where things went wrong in your finances that led to your bad credit rating.

They are taking a chance on you solely because you were brave enough to fight for our country’s freedom.  They feel like you do deserve the chance to have a fresh start because of your service to our country.  That’s the reason they exist in the first place – to help veterans in many different ways.

Car Loan

One of the best options you can have is with a car dealer who specialized in making car loans to people with very bad credit. Most dealerships like these carry older model cars with higher mileage, but they are often good cars and can at least get you on the road even with very bad credit.  The way they work is that you apply for a car loan and they usually finance the loan themselves.  Your interest rate will be high and you will make your payments directly to them.  Your car is your collateral so if you don’t make the payments, the car will be repossessed.

Of course, another option for people with very bad credit is to have a co-signer guarantee the car loan.  You and the co-signer will both own the vehicle.  The loan is made based on their credit history so you’ll want to find someone who has good credit to offset your bad credit.  Then make the payments on a timely basis.  Otherwise, they are liable for the loan and will have to make the payments for you.

Private Student Loan

You can start by looking into government subsidized loans such as the Stafford Loan.  These are loans that you can obtain through your school and you don’t have to repay them until six months after you graduate.  The interest rate on these loans is usually quite low making it affordable for you to repay after graduation.

Another option for you to look at when trying to find a private student loan when you have bad credit is to have your parents get a PLUS loan.  This will be in their name and will also be at a lower interest rate.  Your bad credit won’t be an issue since the loan approval will be made solely on their credit rating – not yours.

There are also many private student loan companies you can explore when you have bad credit.  Start by contacting your local bank where you have your checking or savings account.  Since you have a relationship with them already, the likelihood of them approving a loan for you is better than if you work with another financial institution that doesn’t know you at all.

Phone Contract

First, you will want to check with the cell phone company and have them run your credit.  If you do have bad credit, they will most often come back and tell you that in order to get a phone contract; you will have to put down a deposit on the contract.  This shows good faith in that you are promising to pay the bill and if you don’t, you forfeit your deposit.

The company may also offer you a pre-paid cell phone that is a month to month contract.  These plans are made especially for people with a bad credit rating and getting a cell phone contract like this can actually help to raise your credit rating if you make on-time payments and don’t get the phone cut off.

A third option in getting a cell phone with a bad credit rating doesn’t even involve a contract.  You can buy a phone at almost any retail outfit such as K-Mart, Wal-Mart, or Radio Shack.  Phones like this require you to also purchase minutes for the phone in order to use it.  If you run out of minutes, you just purchase more.  These phones work much like regular cell phones, but they may have restrictions such as with roaming and long distance, so you’ll want to thoroughly check out the options before you buy.