Are you one of the 16 percent of Americans who have bad credit?
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If yes, you certainly know that having bad credit isn’t a good spot to be in. Bad credit can make many aspects of your life much harder. For instance, you might face an uphill task getting a landlord to approve your rental application. Even getting any kind of loan from a traditional lender becomes a challenge.
In this article, our focus is on loans. We’re telling you how to get a short-term loan with bad credit.
Let’s get into it.
How Much Money Do You Want to Borrow?
The first step to getting a short-term loan is to know how much money you want to borrow. This is crucial because short-term loans typically involve small amounts of money, ranging from $500 to $10,000. If you’re looking for a short-term business loan, it’s possible to secure a higher amount.
When you know the amount of money you’re looking to borrow, it’s easier to establish whether a short-term loan is right for you. If you’re thinking of borrowing $50,000, for example, you’ve got no business looking for a short-term loan. Most lenders will tell you that what you want is beyond their limits for a short-term loan.
In general, you want to borrow a small amount when you have bad credit. Lenders already have a reason not to lend you money, so don’t give them another by requesting a high amount.
Know Your Credit Score
On its own, the term “bad credit” doesn’t give a lot of information about the state of your credit history. Of course, we know that your credit history isn’t attractive, but bad credit is a range. When using the FICO score, bad credit is any score that falls below 670 and above 580.
Lenders want to look at your credit score, even if they know you already have bad credit. This is because, in the eyes of some lenders, a credit score of 670 isn’t as bad as a credit score of 580. In fact, it’s possible to find lenders whose minimum credit score requirement for a short-term loan for people with bad credit is 600.
Going by this, if your credit score is 600 or higher, you won’t worry about being locked out of the loan because of your bad credit.
Know the Type of Short-Term Loan to Go in For
Broadly speaking, there are two types of short-term loans for bad credit: secured loans and unsecured loans.
A secured loan will require you to provide collateral in order to get approval. Title loans are a good example of secured loans. Be sure to learn how title loans work before going for one.
An unsecured loan doesn’t require any form of collateral. Instead, the lender relies on your personal income. This income could be from a job, business, or even social security payments.
Depending on your situation, you can easily determine the type of short-term loan to get.
You Can Get a Short-Term Loan with Bad Credit
Yes, you can get a short-term loan with bad credit. However, it might not be a walk in the park. Although there are lenders offering bad credit loans, a lot still rides on your preparation. With this guide, you now know how to approach the process.
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