Sometimes your expenses just keep piling up, and there seems to be no end of it. And there may be a situation when an emergency pops up, and you have no savings at all. That’s just the way it is – you cannot predict everything that happens. Normally it’s not that big of a deal – you can always ask for a loan, deal with your problems and repay the money when you are able to do this. But it is not that easy when you’ve already applied for a loan, got the money and for some reason failed to repay it on time. In result, you have what is called “a bad credit”, because somewhere it was recorded that you did not keep your contract with your loan provider.
In the ideal world, you would just pay that loan back and wait for a few – two, or in some cases even six – years for your score to go high again. But unfortunately reality is what it is, and sometimes you just can’t wait and have to act now.
And it is not that you don’t have a choice. You do, as there are online providers who can lend you money without running a credit check. Other can do that even if they find out that you have a bad credit history. But before you decide to take such a loan, it is good to know a thing or two about how it all works.
In most cases, when you want to take the loan from the bank, your credit history will be verified. If you want to avoid that you have to take the online providers’ offer into consideration. Your options differ according to the country you are in. In some countries, there are few institutions that hold records of those who failed to repay their loans on time. If that is the case, not all providers check with all of the reporting companies about their new clients. So you have to know which company hold your records and apply for a loan to a provider who does not have access to your records.
Yes, it can be as simple as that!
In other countries – for example, the USA, but also Australia is currently heading that way – the good news is, the providers try to look at all the financial history of the applying possible future client. So they don’t look only at the loan you’ve failed to repay but also whether or not you pay your monthly bills. If you have nothing to hide there, your score may not be as bad as it would if the provider focused solely on your past loans history.
So, when you are struggling with your financial situation and are afraid of problems with getting another loan caused by your credit history, first you should check whether your situation is really as difficult as you think. Maybe you won’t have a problem with getting a loan after all!
But let’s say, that your history really is bad, and you won’t score any points to make you look better. There may still be some providers willing to give you a loan, so nothing is lost. But the question you should ask yourself is whether taking another loan will solve your problems in the long run and wouldn’t it even make the situation worse.
If you’re still determined to get a new loan, do thorough research and choose the most respectable provider. There a lot’s of predators out there, so you have to be careful.
You should also know that there are many possibilities in the loans’ market. You can take a payday loan – they are in most cases easier to get, but it may turn out that with your history you won’t be able to loan only a modest sum. This kind of a loan needs to be paid back on a certain day – a whole sum at once, plus the interest and other possible fees, like insurance. In most cases the day of your repayment is not so long after the day you’re taking the loan – the period you have to get the money back can be therefore only a month or two.
There also another day: an instalment loan. This kind of a loan is paid back in rates, so there’s only part of your loan to be paid back each month. That way – if you’re for example taking a loan to buy a new car to get to a new job you’re starting this month – you don’t have to worry about giving back the whole sum right away. But there’s a catch. Usually, you have to pay back significantly more than you’ve borrowed and sometimes you can’t repay the money earlier than previously agreed, as the provider would not get his provision.
Whatever you choose, you should read the terms of your contract extremely carefully. Remember, if you choose a provider that do not run a credit check at all, it means the company is not able to trust you that you’ll give them their money back because they have nothing to fall back upon. And as it’s the same with the other people with a bad credit history, there is the way the companies make sure that they’ll earn money on a contract with you. They do it by making their interest rate really high, in other words, the loan you get is overly expensive, especially when it comes to the payday loans. Therefore it may turn out that in your case it’s better to go for an instalment loan.
But the good news is, if you manage to repay the loan you’ll take, your credit score will be higher and future loans easier to get!