The personal loan market in the US is growing very diverse and accommodating. That said, options are limited when a bad credit score holder is looking. Sometimes, there seem to be none but mostly that’s when the person isn’t looking well enough.
To put it short and simple, the answer is yes. However, there is a catch and the loan options would come at a price. Let’s throw some light on all of that. But before we do that, do understand that we are discussing personal loans here, which would include the typical personal loans with installments, cash advance loans and payday loans. There are four other loans that in some cases may be available to you and that too even from banks. We would be skipping discussions on these as they are restricted in purposes or to who can borrow them. These include Credit Card cash advance loans (if you already have a credit card), Car loans, Home loans and Business Loans.
Why do I need Loans?
A lot of people may not be the kind that tend to save for future. Some others might just have exhausted their savings. Yet another few may have a need for money now for a variety of reasons, while they have the ability to pay back with interest in the future.
Loans exist for a good number of reasons. A lot of people grow their wealth using loans smartly. Some depend on loans for daily need and lifestyle. Some use them for medical exigencies or sudden unforeseen, unavoidable expenses.
Whatever be the reason someone may need a loan, a personal loan is one that does not get affected or require a particular proven reason, unlike a car, home or a business loan to name a few that do.
The Direct Lender Advantage
The banking system ensures that banks only provide loans to people with a healthy credit history. However, bad credit scores as low as 500 or sometimes even lower, can be a result of multiple issues which don’t always necessarily have to do with missed payments. This closing of doors for a poor credit score holder, who might still be able to pay back loans on time, lead to the market creating solutions for such a borrower. And of course anyone can be in a need to borrow money. So the market has to accommodate options for those whose credit history is less healthy too.
That said, it’s time to talk about direct lenders. When we mention direct lenders here, we are referring to lenders who are non-bank entities – they can be lending companies or individuals. While dealing with direct lenders might not be comparably safe to dealing with an established bank, direct lenders have a place in the market and there are reasons for it.
Direct lenders have the option to provide loans to people with poor credit too. Not all direct lenders may extend such benefits to their borrowers but many do. We at CashUSAToday are an example of a trusted direct lender having years of experience in no credit check loans.
While direct lenders may agree to serve almost everyone who’s over 18 years of age and a citizen/permanent resident of the US, it is very important for the borrower to ensure their protection and deal with lenders who are trustworthy. There are many red flags that clearly indicate a risk and a borrower must learn how to filter out such lenders. The US government is consistently working towards ensuring a safer market for borrowers and lenders. Many of the recent regulations have made the market safer but there can always be flaws left for people to exploit and it is a good idea to learn to save oneself from getting exploited.
Generally, if your lender has a good online presence, does not charge for loan application, is accredited by BBB, has a secure website and online reviews and offers transparent deals via a valid agreement, you should be on the safer side and this is how you can get a loan having a credit score as low as 500!
Loans will be Expensive but can help improve your Credit Score
Your credit score is intended to be an indication of how safe it is for a lender to extend credit to you. This implies that giving you a loan would be riskier for a lender if your credit score is low. When anyone makes a high risk investment, it’s because they expect/anticipate high returns on it. This is how markets work and the debt market is no different. Hence, if you suffer from bad credit history, your lender would expect more returns from the choice of extending you a loan, which means that your loan is going to be more expensive than a conventional bank loan.
Nonetheless, there are people who use loans to improve their credit score which then enables better loan deals for the future. One such way is to carefully calculate how much you can repay, and apply for a loan of exactly that amount and pay it back perfectly on time. If your credit score is quite low, it can benefit to an extent. Other ways include using loans for debt consolidation, using loans without credit checks to pay compounding debts etc. A lot of online resources are out there to guide a borrower looking to use such strategies.
Personal Loans for Credit Score under 500?
Few direct lenders don’t just deal with borrowers having a low credit score but also deal with borrowers without conducting a credit check or taking the credit score into account at all. To ensure that dealing with such a lender is safe, you need not only to ensure that the lender is legitimate but also you need to know that it is safe for you to take the loan and that you shall be able to repay the loan on time, so you don’t get trapped in the debt cycle.
Some direct lenders who offer a No Credit Check Loan, are more legitimate than others because they do such a check for you. For example, at CashUSAToday, we have a process in place to look at your income and it’s stability to understand how big a loan is safe for you to apply for. Only after this is determined, is your loan approved and deposited. Such safety mechanisms are very critical when dealing with a direct lender for a loan and it is highly recommended for each borrower to understand the loan and repayments before agreeing for any transaction.