Monday, April 8, 2013, AM | 6 Comments
There are a number of reasons to take out a personal loan. You can use it for debt consolidation of credit cards which have high interest rate, help finance any sudden unexpected expenses such as medical bills, kitchen repair, home repair, taxes, weddings and so on.
Taking out a personal loan to meet expenses can be quite a handy option irrespective of your credit history. You can apply for unsecured personal loans to solve your financial problems.
Taking into account the amount of money you require as well as how you will repay the entire loan amount, personal loans are a more viable option as compared to some other kinds of financing.
Since there is no collateral that you have to put up against your borrowed amount, the amount of loan you are getting, the interest rates on them and the term of the loan vary as per the credit score you have.
The higher the credit score you have, the higher is your creditworthiness and thus lower is your interest rate charged.
The lenders who give personal loans tends to charge higher interest; almost 20 % to 30% APR if you have a bad credit record.
Thus if you have a bad credit record and still want to take out a personal loan, these are the options you have:
Check for error in your credit report
Your credit report may have many sources of error. You can draw your annual credit report from any of the three major credit bureaus and then scour them for errors.
Errors can be due to printing mistakes or due to non-updating of data regarding your credit situation. In such a case you can write to your creditors to report the correct status of your loans to the credit rating agencies which can them make the necessary changes in your credit report. These will altogether pull your credit score up.
You can work on building your credit score
This can be a way to get a loan with bad credit. Many a times you are denied an unsecured personal loan because you have a bad credit.
You can work on that by slowly rebuilding your credit score. This you can do by taking out credit cards having low limits and then paying them back in time. In this way a steady record of repayment would be created which will help push up your credit score.
Take a Co-signer
A co-signer is a person who takes the responsibility of the loan along with you. When you are in desperate need of an unsecured loan and no time to redeem your bad credit score, you can solve the problem by taking a co-signer.
Generally you should choose a friend or relative as a co-signer who has good credit terms. This will help you to lower the interest rate you are getting.
However, it is to be kept in mind that the co-signer carries the entire burden of repayment in case you default on the loan. This can affect the credit score of the co-signer negatively and can affect your personal relationship with him.
Thus you can see that getting a personal loan has quite a broad scope. It is not difficult to get an unsecured personal loan as long as you have a long term plan to put your finances back in order.
You should take care that the personal loan you have taken works towards pulling you out from the quagmire of debt rather than pushing you further into it.Facebook.com/doable.finance