Loans for When Bad Credit Limits Your Options

Your credit score is a lot more than just a number. As you gauge of your creditworthiness, it can affect all areas of your financial life. Banks look at this number when you apply for a loan—so do car insurance providers, landlords, and cell phone providers. If you have a low score, you’re considered a credit risk and no bank or insurance company will ever offer you a deal.

You wouldn’t be alone. According to a recent report published by the Corporation for Enterprise Development (CFED), nearly 56% of Americans have subprime credit scores. It’s no wonder, considering how many factors can lower your rating. Of course, paying late on any of your credit card payments will harm your credit, as will completely ignoring your bills until creditors charge off your account or send it collections. Other obvious conditions include defaulting on a loan, foreclosing your home, or filing for bankruptcy.

But there are plenty of less-than-obvious reasons that cause your score to plummet. If you know you’re bad with money, pairing your credit accounts down to one or two cards can seem like a good idea. Indeed, your rating is based on how many credit applications you’ve completed, but it won’t have the affect you might think. Closing an old credit card—especially one in good standing—can be damaging, as it erases your good credit history form the books. As a result, your history can look a lot shorter than it actually is, which is a red flag to banks and other lending outlets. Meanwhile, when you close a card that still has a balance, the process reduces your limit to zero. With the additional balance remaining, on paper it looks like you’ve maxed out your credit card.

A few simple mistakes like this and you could be dealing with bad credit for a long while. At the moment, it might not matter. You could be doing alright without the support of these financial institutions; however, life is full of unexpected charges, bills, and emergencies that your meagre savings might not be able to cover. In the future, you know you’ll need a loan to get by. But if you have bad credit limiting your options, it can seem like you have no option but to renege on your payments. While this is a sure-fire way to generate an even lower credit score rating, it’s not your only option. When you contact a reputable online lender, you have the opportunity to get a personal line of credit—even when your credit score is one the bank typically rejects.

Direct online lenders are an excellent alternative to traditional lending options because they offer reasonable, convenient, and simple loans to those who can’t normally get them. Their application process needs none of the in-depth financial assessment that banks do, requiring instead only proof of employment, a bank account, and an email address. As long as you’re over the age of majority, you can apply for a loan. You’ll find out if your application qualifies instantly, and when approved you’ll have access to your line of credit within a single business day.

To find a direct online lender that can help you, stick to those that are licensed by your state to issue loans. This will ensure the rates, terms, and conditions of your line of credit are in accordance to state- and nation-wide regulations regarding the limits of money lending. These limitations were put in place to save consumers from accepting large sum loans with unreasonable terms that they have no means to pay back. These laws and licenses provide a healthier option for your lending needs, regulating lines of credit to smaller sum (no larger than $1,000) with manageable repayment terms.