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Bad Credit Loans at Nation21

Have you recently ordered a copy of your credit scores? FICO scores below 620 or VantageScores below 550, are considered poor. Why are credit scores important? They are used by lenders to gauge the borrower’s creditworthiness. Low scores mean the borrower is a high-risk investment. According to historical data, risky borrowers tend to have higher rates of defaults. Therefore, traditional lenders like banks don’t grant loans to people with bad credit scores. Consumers with a limited credit history also find it hard to get approved for traditional loans.

The way out 

If loans were only meant for borrowers with good credit scores, millions of people would miss out. That’s because over 60 million consumers in the US have poor credit scores. 

Fortunately, all borrowers can access loans regardless of their credit types. In fact, the market for bad credit loans is reported to be expanding.

You now have lots of bad credit lenders to choose from. Competition brings about better rates and favorable loan terms. In this article, you’ll learn how to find & compare bad credit loans, how these loans work, and more. 

What are bad credit loans? 

Simply defined, they are forms of credit designed for borrowers with bad credit. This category of borrowers is also referred to as high-risk or subprime consumers. In addition to having poor or low credit scores, they might be making less money than prime-consumers.

What is bad credit?

You’re considered to have bad credit if you have a history of not managing your credit accounts properly. For instance, having a habit of making late payments on loans or even paying your bills late.  Consumers with bad credit might also have too much debt than they can manage. It makes it hard for them to qualify for new credit. 

What is creditworthiness? 

It’s the quality of deserving credit. If you have high creditworthiness, lenders deem you fit enough to receive loans with the highest loan amounts and lowest rates. Your creditworthiness is also an indication of how likely you are to default on your loan obligation. 

How does the lender determine your creditworthiness? 

Your past credit history helps the lender predict your future behavior with debt. The thinking goes that if you have a pattern of making late payments or defaulting, the risk of lending to you is high. The lender has to mitigate this risk by charging higher interest rates and reducing the loan amount. 

Lenders will generally look at several things to tell your creditworthiness:  

1) Credit Report

The credit report is a repository of all your past & current credit accounts. It also contains public records such as bankruptcies filings,  judgments, foreclosures, etc. Lenders commonly use reports from Experian, TransUnion, and Equifax.

2) Credit Scores

Credit reports may be tens of pages long. It might be time-consuming for the lender to pour over all your credit account entries checking for late-payments. 

Is there an easy way to tell the borrower’s behavior with credit? Yes, the credit score. 

The score is not listed in your credit report. Instead, it’s calculated using scoring models. Essentially, they are complex computer algorithms. Some scoring models, include FICO (most popular), VantageScore, TransRisk, Experian’s National Equivalency Score, etc. 

3) Other factors 

When assessing your creditworthiness lenders also consider: 

  • Capacity to repay the loan – It’s determined by how much money you earn, your current debt obligations, fixed monthly expenses, etc.
  •  Personal assets – Banks will want to know more about the borrower’s assets. If you have liquid assets such as hard cash, shares, etc., you’re deemed more creditworthy. 
  • Character – Traditional lenders may go as far as analyzing the borrower’s character. They might look into the borrower’s schooling, employment history, etc. With traditional loans, you may have to pass the loan interview.

What factors determine your creditworthiness?

Factor Importance
Credit scores
Monthly income
Presents a summary of past credit history
Determines your capacity to repay the loan
Tells the lender about your financial discipline
Liquid assets are seen as a quick source of cash

Types of Bad Credit Loans

Borrowers with bad credit have several options:

1) Payday loans

All credit types can obtain payday loans. The borrower just needs to prove that they have a stable income and active bank account. The loan term lasts for 8 to 30 days with the loan’s due date coinciding with the borrower’s payday (when they receive their paycheck). 

The loan amount ranges from $50 to $1000. Payday loans are highly regulated and not available in all 50 states. What’s more, they are not suited for long-term use. 

2) Auto title loans

Do you have a title that establishes you as the owner of a particular vehicle? You can use it as security for a car title loan. Failure to pay the loan, however, means that you’ll lose ownership of your car. Like payday loans, car title loans come with high APRs.

3) Pawnshop loans

Pawnshops accept valuable items in exchange for loans. However, these loans come with high-interest rates and terms of up to 30 days. The pawnshop later makes a profit by selling unredeemed valuables.

4) Personal loans for bad credit

They are offered at cash stores and by online lenders. Loan amounts are higher than those offered by payday loans or pawnshop loans. For instance, you may access to $5000+ without any security or co-signer. The term for bad credit loans ranges from 3 to 24 months. 

How to get a bad credit loan

It’s quite easy to obtain your bad credit loan. First, you need to pass some basic requirements:

  • Be 18 years or older. 
  • A U.S. citizen or permanent resident with SSN. 
  • Have a stable income. The chances of getting approved are higher if you receive your income through direct deposits at recurring & consistent dates each month.
  • Have a checking account or savings account. 

Applying for Bad credit loans with guaranteed approval

If you have satisfied these conditions, all you need to do is submit your application right here at Nation21Loans. We are a loan matching service and not a direct lender. Basically, we connect you to suitable lenders in our network.

“Guaranteed approval” simply means that you have a high rate of getting accepted despite having bad credit. 

How to compare personal loans? 

Are you looking for the best bad credit loans? Just compare loan offers from different lenders. Comparing lenders is difficult when you manually do it by visiting each lender’s site. However, it’s easy when you apply through Nation21Loans.

Comparing lenders will not hurt your score

When you submit our application form, lenders will pre-qualify you and send loan offers to your inbox. You get to know where you stand without completing the entire loan process that includes income verification or comprehensive credit checks.  That’s why we encourage borrowers to submit online loan applications to see & compare options.

Applying does NOT affect

your FICO® credit score!

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