Not everyone is blessed to be a homeowner; many people rent or lease their residences and thus do not have any substantial collateral to offer a lender when obtaining a loan with bad credit. Others may own their home or other collateral, but be unwilling to risk losing their home in such uncertain financial times. By placing collateral against the value of a bad credit loan, you are giving the lender permission to place a lien against your home or other valuable property. If you fail to pay your loan payments or fall behind in making payments on your bad credit loan, the lender can seize and sell your collateral. That is a risk that many people simply will not take. But you do not have to have collateral to get a bad credit loan. Many lenders are willing to write loans for those with poor credit, regardless of their ability to post collateral.
Unsecured Loans For Bad Credit
The unsecured loan for poor credit is often referred to in the lending industry as a signature loan because it only requires your signature to obtain funding. Unsecured loans do come with a downside: inflated interest rates. Because of your poor credit history and your inability or unwillingness to pledge collateral to back up your loan application, lenders usually inflate the interest because of the elevated risk that the lender assumes when loaning money to you. Be prepared to pay several points more interest-wise than a secured loan would cost when taking it out.
Amounts Available In Unsecured Bad Credit Loans
When taking out an unsecured bad credit loan, you can ask the lender for any amount that you feel is reasonable. Most of these loans on the market start out around $2,500 and go up to $10,000 (sometimes more if you are taking out an auto or car loan). Use caution when taking out a poor credit loan that is unsecured. Only agree to a payment amount that you are comfortable paying, and make sure that the loan payment fits well with your current budget.
Qualifying For Your Bad Credit Loan
To qualify for an unsecured bad credit loan, you will need to meet the income requirements and have a credit score of at least 600. Some lenders will loan to those with FICO credit scores lower than 600 if the amount that the borrower asks for is less than $5,000. You can check your own credit report with any of the three credit bureaus once each year without charge - which is a good idea when applying for one of the unsecured poor credit loan products on the market. Your bad credit lender may also ask you to supply him with a copy of your tax return or the last few pay stubs from your place of employment. If you are retired, you may be asked to present proof of income by way of an income statement from the agency or company that handles your retirement benefits.
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