Building a Good Life with a Bad Credit Loan
(You Can Rebuild Your Credit Score and Deal with Negative Debt By Visiting www.americandebtenders.com/debtdispute
Having bad credit can feel like getting a flat tire on your way toward a solid financial future. It can also make you feel like you’re the only one stranded on the side of the road with no help in sight. You could convince yourself that things may have been the same had you taken a different route. But even if your situation was unavoidable, it doesn’t make it ideal.
The good news is, you’re not the only one, and you have options for getting back on track. Choosing a bad credit loan can help to soften the blow of a tough financial season. And it could help you bridge the gap between a long-term plan and a practical step toward rebuilding credit.
Average credit scores by state
Believe it or not, the majority of Americans have what’s considered to be a moderate to low credit score (580 to 620). Much of the stress that may come with having bad credit can be relieved once you have a clear understanding of what it means for you, what resources are available, and how to protect your credit score in the future.
Does having bad credit mean I’m being punished for bad financial habits?
It’s important to remember that having bad credit doesn’t always mean that someone was irresponsible. There are a myriad of life circumstances that can impact finances and set you back – such as unexpected medical bills, loss of employment, a natural disaster, etc. Having a low credit score can also mean that you’re simply just starting out, and have yet to build any credit. Bottom line: Many people find themselves having a low credit score through no fault of their own.
But regardless of the events that lead to it, there are some general side effects of having bad credit.
Higher interest rates
A lower credit rating could mean a higher risk for default. Lenders may compensate by setting interest rates higher to protect their investment. So, borrowing a large amount could mean paying a large amount of interest over time.
Difficulty getting approved altogether
If you have an unusually low credit score, you may see few lenders willing to take a chance on approving you for a loan or credit card.This is a realistic situation that many with no credit find themselves in – such as a student, applying for a loan. In this case, getting a cosigner is usually the route to take.
Difficulty renting a place of residence or getting a phone contract
Even if you’re trying to rent a place of residence or sign a phone contract – neither of which would call for a loan – having bad credit could still potentially slow things down. This comes as a surprise to some because they think agreeing to pay the bills in cash should nullify the credit risk. But landlords and phone companies could in fact check your credit before agreeing to do business with you.
Paying more security deposits
Utility companies – similar to landlords and phone providers – can check your credit as well. You may be asked to pay a security deposit, or a higher security deposit, depending on your credit score and the company’s policy. Since you wouldn’t be paying interest on utilities, the one-time fee upfront works the same as insurance would for the provider.
Choosing a bad credit lender
Despite the difficulties, having a low credit score doesn’t mean getting a loan is impossible. What it does mean is you may need to utilize a little more strategy in selecting a lender. You can be approved through a short-term lender, online lender, bank, or credit union. You have plenty of options to choose from, and convenient ways of searching for them. But if you decide to do a little more digging on your own, it helps to know where to start.
Competitive interest rates are only one piece of the puzzle. Your goal is also to identify supportive resources that help you chip away at debt and ultimately get back to building your credit score. Here are a few things to think about when considering your options:
Types of bad credit personal loans
Installment loans: These loans don’t have any collateral attached, but do require you to pay through amortization, which are equal monthly installments over the predetermined loan term.
Payday Loans: Also don’t require collateral, but you must repay by your next payday. For this reason, they are usually short-term loans with high APR.
Cash advances: Similar to payday loans. Cash advance lenders most likely won’t check your credit, but these are most useful if you have a credit card or steady income. Not available in all states.
Bank Agreements: Per your bank’s policy, they may approve you for a short-term loan or minimal overdraft agreement. This is of course dependent on your banking history and ability to keep your account open.
|What to look for in a lender||Questions to ask|
Do they have a full online/mobile service?
Is there a comprehensive pre-approval process?
Are there service agents ready to speak with me whenever needed?
Are they licensed in all 50 states, and where are the branch locations?
What’s the minimum credit score to receive service?
How is underwriting handled, and will they consider alternative credit data?
Are there a variety of secured and co-signed loans options?
Do they offer zero and low down payment options?
Are they willing to waive lender fees?
3 life events that may call for bad credit loans
Consider some practical reasons why getting a bad credit loan could be a better choice than some of the more common ways of dealing with financial problems.
Building your Credit Post-Bankruptcy
Filing for bankruptcy is a decision that shouldn’t be taken lightly. While it can help to stem the tide of debt you find yourself in, it can certainly cause your credit score to take a major hit. However, many have bounced back from bankruptcy. The key is knowing when to take the first step.
Bankruptcy in the US
Understanding what’s gone and what’s left over
Bankruptcy has a tendency to feel like the end, not a beginning. It’s natural to have doubts when you’re having financial problems, and the hardest part can be accepting the realities and feeling confident about the future. Or, you might be looking at things from the other side – relieved that so much debt has been lifted.
The truth is, filing for bankruptcy is more like taking a life raft than an escape hatch. There are still some debts that you’re responsible for repaying, even after filing. It’s important to know which debts bankruptcy can touch, and which debts it can’t.
|Bankruptcy Eliminates||Bankruptcy Doesn’t Eliminate|
Chart your course
Bankruptcy doesn’t stay on your credit report forever. Once it’s discharged, you essentially have a clean slate to rebuild your credit score. However, the costs involved with filing shouldn’t be taken lightly either. Putting together a step-by-step action plan following bankruptcy is highly recommended, if only to avoid trying to do too much too quickly.
Developing good habits with credit and spending can help you bounce back from bankruptcy. Here are a few of the essential steps:
Make a budget – Track your expenses for three months and create a budget around your monthly income. When you can, establish an emergency fund.
Pay all bills on time – Even after filing for bankruptcy, your payment history is being tracked.
Beware of scams – Stay away from anyone offering to repair your credit post-bankruptcy for a fee. Only you can build your credit, and it’s free.
Your eligibility for a loan post-bankruptcy will most likely be scrutinized. Your employment status, income, and ability to manage repayments means everything when it comes to being approved. Your assets could also be a factor, as you’ll most likely be required to provide collateral. If you had to file for bankruptcy due to unemployment, you could start with a manageable cash advance or some other short-term agreement. The key is to keep chipping away at your debt until you can build a good foundation in its place. Keep in mind that bankruptcy, while initially damaging to your credit score, doesn’t have to undermine your financial future.
Common suggestion: Get a secured credit card
Whether you file for Chapter 7 or Chapter 13 bankruptcy will determine the amount of time it will appear on your credit score (7-10 years). Some financial advisers suggest opening a secured credit card account will help you build credit quickly after the bankruptcy is lifted from your report. That’s true, but any interest rates and annual fees attached could also put you at risk of falling into more debt.
Why a bad credit loan could be a better choice
Most credit unions and banks want to see at least 12-24 months of solid payment history before approving you for any kind of secured method of building credit. Getting a bad credit loan can help you establish some consistent payment history without having to worry about annual fees plus interest. Be prepared for lenders to see you as high-risk. But if you can find an affordable loan and repay it, you can begin to get your credit score back on solid ground.
Funding for Disabled Veterans in need of Home Modifications
The U.S. Department of Veterans Affairs (VA) provides the most comprehensive economic and health-related assistance for vets and their families. However, there are some limitations. According to the U.S. Census Bureau, a total of 3.8 million veterans had a service-connected disability rating as of 2014.
Service-connected disabilities are wide-ranging, but consist of a disease or injury obtained during active military service. While not every individual faces the same problems after service, the top three economic challenges tend to be unemployment, poverty, and homelessness. Veterans with service-connected disabilities, who are in need of specific home modifications and medical treatment are among the most at risk of experiencing some kind of debt that can lead to bad credit.
Government assistance for veterans
There are various resources for veterans with debt. One example is called the VA Medical Care Hardship Program. In addition to receiving help with some copayments related to medical treatment, veterans can also benefit from existing debt waivers. While programs like these largely make approvals based on service rather than credit history, there are still some strict eligibility requirements attached – i.e. you need to submit a letter for review, outlining your financial hardship. And this mostly applies only if your gross household income has decreased.
For service members and veterans who are living with a family member, there are three VA housing grants that allow for home modifications to the family member’s home:
- Specialty Adapted Housing Grant
- Special Housing Adaptation Grant
- Temporary Residence Assistance Grant
However, like the larger health benefits programs, the scope of eligibility can be narrow. Below are the specific details of each grant.
Blindness in both eyes having only light perception, plus loss of or loss of use of one leg, OR
The loss of or loss of use of one leg together with the loss of or loss of use of one arm, OR
|Who owns the home?||An eligible individual|
|Grants you can use||Maximum of 3 grants, up to the maximum dollar amount allowable|
|Who owns the home?||An eligible individual or family member|
|Grants you can use||Maximum of 3 grants, up to the maximum dollar amount allowable|
|Eligibility||Dependent on eligibility for SAH and SHA|
|Who owns the home?||An eligible individual’s family member|
|Grants you can use||Maximum of 1 grant|
What parts of the house qualify for renovations?
- Bathrooms, kitchens, and bedrooms
- Covered porches, ramps, and walkways
- Garages, carports, and passageways
- Doors, windows, and flooring materials
- Security items
- Concrete or asphalt walkways
- Sliding doors, handrails, and grab bars