Bad Credit Loans
A bad credit loan is a type of loan that is offered to individuals that have poor credit.
How do you know if you have bad credit?
First, before you apply for a loan, you should write the credit bureau to get a copy of your credit report.
How can you tell if you have bad credit?
If you are receiving calls from a collection agency, you have bad credit. You have bad credit if you have three or more late payments on your credit report.
But there is more!
You also have bad credit if you have any of the following on your credit report:
Unpaid closed accounts. This could be credit cards, auto loans, home loans, apartment lease, cellular phone, cable bills and much more.
Any account that is closed and was not paid off will show a charge off on your credit report. This is one of the worst items that you can have on your credit report. It tells the person that checks your credit that you will never pay off the bill. You can also get bad credit by co-signing for another person.
For example, you could co-sign for a person to get a new car, loan or apartment. If the person you co-signed with is ever late of a payment, that would cause you to have bad credit.
How To Clean Up A Bad Credit Report
If you would like to clean up or repair your credit, your first step is to order your credit report. Once you have received your report, you should either pay off any unpaid bills on your report or contact the account holders to make some type of payment arrangement. It is always better to pay the bill off if possible. If you owe a large amount of money, you may want to contact a debt consolidation service.
For a small fee, they would contact each account holder to work out a payment plan that you could afford. They would combine all of your bills into one monthly payment. This service would improve your credit history over time.
If all of your accounts are paid off and still show a history of late payments, you could hire a credit restoration service. Credit restoration or credit repair companies can contact the credit bureau to try to get them to remove the late payments from your credit report.
These types of services can only help you to clean up your credit history if you have already paid off your accounts. The reason why your account must be paid off for a credit repair company can be able to help you, is because the credit repair service will send a letter to the credit bureau requesting to have all the negative items removed from your credit report.
The credit bureau will send all your account holders a letter stating that you would like to remove the negative information that they sent to the credit bureau about your account. If your account holder does not respond to the credit bureau’s letter, the credit bureau would have to remove the information from your credit report. There is a much better chance that the account holder will not respond to the credit bureau if your accounts are closed and paid off. If your accounts are not paid off, the account holder knows if they respond to the credit bureau, the negative items will stay on your credit report.
The bottom line is, you need to pay off all of your accounts before you try to use a credit repair service. The credit repair company can not help you if you have open or closed accounts that are not paid off.
How to rebuild your credit?
Besides cleaning up or repairing your credit report, you must also add good credit to your report before you would be seen as having good credit.
Below are a number of things you can do to build up your credit.
Get a auto loan. If you are employed, you can get approved for an auto loan, even if you have poor credit. This method will only help your credit, if you make all of your auto payments on time.
Apply for a major credit card. With poor credit, you will need to apply for a major credit card that offers a low line of credit for individuals that have bad credit. Again, this method will only help to rebuild credit if you make all of your payments on time.
What About Personal Loans With Bad Credit?
There are a few companies that offers personal loans for people with bad credit. You will need to look for companies, not banks that offers high risk personal loan programs.
Banks never offer bad credit loan programs. You will need to look for credit unions or small lenders. There interest rates are much higher than a bank because of the higher risk that they are willing to take.
If you need fast cash and have a checking account, you could get a payday loan for up to $1,500 with no credit checks. They are not concerned about your credit history because they would start collecting there payments in about 2 weeks from the time that you have received your loan. Your payment is collected directly from your checking or savings account.