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What are Bad Credit Loans?

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Bad credit

Bad credit

Whenever people are unable to finance a certain project, they refer to the banks and online lenders for a credit loan. Online lenders are more famous for handing out smaller amounts of personal loans, while the banks deal with much bigger numbers. People often apply for these loans when they buy an apartment, car, or when they send their kid to college. Whatever the reason may be, the bottom line is that they don’t have the finances required at the moment.

Of course, not all credit loans are approved. The lenders do a background search on each client to see his or her credit score, their history with paying them off, and whether they caused any trouble. If a potential client has a low credit score, then the chances of being approved are low. Luckily, there is an alternative for those people and it goes by the name of bad credit loans. Although the name might not be the catchiest, it allows many to apply for a credit loan, even though they don’t have the best credit score.

We wanted to introduce you to this type of credit and that’s why we are willing to dig a bit deeper and give you an overview.

The Difference Between Bad and Regular Credit Loans

As you may have figured it out by now, people who apply for bad credit loans are seen as risky borrowers. That is why you may be faced with more interest rates and higher fees, which is not the case with regular loans. The only mutual thing that these two types of credit have is the application process.

The lenders check your credit history, your financial status, and with that information, they decide whether you’ll be eligible to repay them. If you are looking to read the tiniest details, like the credit score categories, best lenders, as well as guides to get a better loan, head over to bestloansforbadcredit.com – they have everything that you need to know.

Are Scams Possible?

The Internet opened up many possibilities for us. Unfortunately, not every outcome can be positive. Scams are happening much more often than they should since many people see the Internet as the best place to rob people of their money. So, to answer your question, yes – scams with bad credit loans are possible.

But, if you follow a couple of simple steps, you will be safe. First off, if the lender is asking you to register in a different state, rather than you home state, then the chances are that you are contacting a scammer. Guarantees without approval, lack of communication skills, and advertising methods are also some factors.

Extra precautions are always welcomed, especially if your financial status is not the best. On a side note, we wanted to mention that if you are struggling to pay off your debt, there are a few side jobs which can be helpful and provide you with a good income.

Types of Bad Credit Loans

Lastly, we wanted to cover some of the bad credit loans. There are 4 types in this section: instalment loans, payday loans, cash advances, and bank agreements. Payday loans and cash advances are the easiest to get, since they are considered short-term loans, but they have greater interest rates.

The bigger interest rates and more detailed background checks that we are witnessing today, especially when dealing with banks, are the result from the 2008 world crisis when the banks around the world were handing out loans without having a plan of action.

For more great articles, read these:

Yes, You Can Buy Someone Else’s Debt

The Best YouTube Channels

The Effects of Financial Stress On Marriage

Image Source: Cafe Credit.

What To Do If Debt Is Accrued By Identity Theft

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What To Do If Debt Is Accrued By Identity Theft

It is recommended you check your credit score at least once a year. However, those of us on debt freedom journies may check it more often. What happens when you look at your report and find something you don’t recognize? What if there is a debt on your report you didn’t authorize? Here’s what to do if debt is accrued by identity theft.

What To Do If Debt Is Accrued By Identity Theft

You’ve noticed something out of the ordinary on your credit report. First thing’s first, breathe. You will want to keep a level head and get all of the information on how to move forward clearly. Identity theft could cost countless dollars if not handled correctly, so you want to be sure to do it right.

File an identity theft report with the Federal Trade Commission (FTC). Next, you’ll want to place a minimum of a one-year (up to seven years) fraud alert on your credit report. This way, you’ll be alerted to any and all activity on your behalf.

Here is what you can expect when communicating with FTC officials about your identity theft. Take a look at the link and be sure to be prepared with the documents and information they need. When you talk to them, inquire about getting free credit reports. They can assist you with getting more than the guaranteed one-per-year.

Once you’ve reported the activity and moved forward with monitoring your credit, take the steps necessary to remove incorrect information. If needed, dispute the fraudulent accounts and request that creditors stop reporting them. To do this, send copies of proof of identity theft, which you will receive from the FTC.

If a debt collector is harassing you during this time, you also have the right to block them from contacting you (if all else fails).

Credit Monitoring Best Practices

Of course, you want to avoid identity theft altogether, if possible. It is a good idea to employ some credit monitoring best practices. For instance, services like Credit Karma and many credit card companies offer free credit monitoring. Many will also alert you if there has been a change. Sign up for alerts so you can be aware if there is anything abnormal taking place.

Additionally, it is always important to stay on top of what kind of scams are circulating at the time. Don’t fall victim to schemes aiming to destroy your credit and finances by being uneducated about them.

Lastly, if you do find anything out of the ordinary on your credit report, call the company right away and discuss what your next steps should be. The sooner you take action against identity theft, the better.

Readers, do you have any identity theft nightmare stories you’d like to share? Comment below! I’d love to feature you on the blog. 

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Why You Should Look at Motor Finance Alternatives

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As a driver, there will come a time where you’ll be looking at changing your vehicle for a newer one. Whether that’s because your current vehicle has become a bottomless pit of repair and running costs, or you’re starting a family a need something bigger than your current model. Unless you have the savings to cover it, it’s more than likely you’ll be looking at financial help to make this purchase easier. But where to begin? It can be difficult knowing which is the best option for you with so many different types of finance available. Here are some pointers to help guide you and why the alternatives may be better.

Older Vehicles Provide Better Deals

With a new year means many great deals on vehicles available. It was reported that 27% of all vehicles sold in October 2019 where brand new 2020 models, meaning many more people went for slightly older plates. This is because of the large drop in prices seen on models between 1-3 years old, even if they have low mileage. You should be able to take advantage of the dealerships wanting to make room for newer cars by moving on their current older stock. Based on that statistic, many people seem to agree. But to truly make the best of reduced costs on a nearly new vehicle, you need to choose your finance options carefully.

Higher Purchase Agreements or a Direct Lender Loan?

It can be easy to find understanding the various details of higher purchase motor finance agreements a little confusing. After all, they come with many different terms that you need to stick to avoid any extra charges. For example, if you were looking to lease a car, this will come with various details such as limited mileage to stay within or condition when giving the car back. For this reason, you could end up agreeing to pay a monthly amount that could end up being much more. Opting to purchase a car outright has far been the cheapest option for many years, as you’ll only pay the value of the car. Easy if you have the savings available, so how can you still do this without having the available funds? Fortunately, there are various alternative motor finance options available that will help.

There are many lenders who are willing to provide low-interest car loans that will provide you with the interest charge upfront and combine it with a flexible repayment length for low monthly repayments. This way you can avoid the dealerships and pay them outright, leaving you to pay a manageable, low rate loan instead. This also means you’ll own the vehicle, meaning you can decide to sell or keep it for as long as you want.

Credit Card

This one will depend on how great a rate you can get on a credit card. Otherwise, you could end up paying a lot more in interest than with any other option available. Credit cards are great for flexible lending, only using when you need it. But if they are not managed well, they can rack up high-interest charges and can quickly create an expensive debt. If you’re thinking of using a credit card, it’s worth looking for 0% interest-free deals that will mean you can, for a period, pay no interest on the amount you spend. The trick is to remember to move the balance to another credit card before the 0% period finishes, with ideally the new credit card having the same promotion.
The great thing about this is you can continue to do this for as long as you have the debt to pay. The only stumbling block would be your credit rating, as you’ll need to maintain the monthly payments to ensure this doesn’t drop and you can’t get approved for another credit card. If done successfully, you could pay no interest at all on your vehicle amount, apart from a balance transfer fee each time you move the funds.

Peer to Peer

This one is much less used than a loan or higher purchase agreement but can work out to be a great money-saving option. Peer to peer lending involves borrowing from other people who are willing to lend to you. This means not borrowing from a bank or car dealer or other direct lender company. Instead, you would go into an agreement with someone just like you; your peers! Now what differs this from just borrowing money from friends or family is that it is done through a peer to peer platform. By using it, you’ll be matched with other people willing to lend the money you require and will still need to undergo a credit check. Interest rates can be much lower, but this will depend on how good your credit rating currently is.

Read the Terms Carefully

Whichever option you choose to go forward with for motor finance should be carefully considered. Not all options will work for everyone and nearly all will require you to have a good level of credit. You should only enter into an agreement you can afford to maintain. This way, you can focus on enjoying your new vehicle, rather than worrying about how to pay for it and how much interest you’re paying back.

For more of our great articles, read these:

Yes, You Can Buy Someone else’s Debt

Here Are Some Handy Debt Free Charts

What Kind of Interest Will You Have On A $60,000 Loan?

The Complete Guide To Getting Out of Debt

 

Image source: GotCredit, via Flickr.

What Are Tribal Installment Loans?

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Tribal installment loans

Occasionally, we take a look at different types of predatory lending to avoid on the blog. In the past, I’ve discussed guaranteed loans and payday loans. While these types of lending can wreck your finances, I think it is important to talk about because many of us looking to pay off debt also have bad credit, which makes us susceptible to predatory lenders.

If you’re looking for a bad credit loan to help you get through a hard time, you may stumble across tribal installment loans. Here’s what you need to know about this type of lending and alternatives to consider.

What Are Tribal Installment Loans?

Tribal installment loans are alternatives to payday loans. The difference is that tribal loans are only available through Native American tribes in the United States. Most tribal lenders are represented by the Native American Financial Services Association (NAFSA). This allows tribes to offer online loans.

Surprisingly, many of programs within the Native American community are paid for with these types of loans, including health care, housing, and youth programs. These types of loans are available to individuals within the tribe as well as non-tribal borrowers. In states where payday lending is illegal, tribal lenders are able to lend borrowers money.

Tribal lenders can lend money to tribal and non-tribal borrowers, and they can even lend money to customers in states where payday lending is normally illegal. While many are legitimate and fair lenders, keep in mind that because they are a sovereign instrumentality, they cannot be sued.

Do They Require Good Credit?

Most tribal lenders do not require good credit. In many cases, they simply require verification that you make $1,000 or more every month after taxes. You won’t be able to get more than $2,500 most of the time though and many lenders will only provide loan terms up to six months.

Should You Get a Tribal Loan?

As mentioned above, most tribal lenders offer loans with ridiculously high APRs. If you plan on getting a tribal installment loan, you should have an aggressive repayment plan. Otherwise, you may wind up paying thousands of dollars in interest and additional fees.

Like with any type of loan or debt you take out, you should always read the fine print. Be sure you are aware of all of the loan terms. Many tribal loans have strict repayment terms.

Tribal Loan Controversy

Most Indian tribes have the resources to be able to fund their own lending business. Many of them are also members of the Online Lenders Alliance (OLA). This typically provides some kind of confidence with borrowers, however, some tribes have been known to practice irresponsible lending to increase profits.

It is also worth noting that some tribal lenders partner with third parties. If that is the case, both the tribe and the third party will collect a portion of the interest charges. In some cases, this increases the interest you pay.

Another thing that is important to keep in mind that because tribal lenders are sovereign they cannot be sued in the event there is some wrongdoing. Additionally, some tribal lenders have been known to charge up to 795 percent APR.

Alternatives to Tribal Installment Loans

When it boils down to it, tribal loans are still high-interest loan options that will not help you further your debt freedom journey. Instead of pulling out a tribal installment loan, consider one of these alternatives.

  • Local resources: If you are having some type of short-term financial issue, look for local resources. The food bank can assist with groceries. You may also have a community program that helps pay utilities or even help you get back on your feet.
  • Payment extensions: Instead of pulling out a loan to cover your current payments, consider making a payment arrangement. This can free up some immediate cash.
  • Side gigs: Maybe consider getting a part-time job or side gig to help with the extra cash you need. Increasing your cash flow is one of the best ways to solve your financial troubles without going into debt.
  • Sell a few things: You can flip things on the Facebook Marketplace by cleaning out the closest at home. There are probably a number of things you don’t use lying around. Consider selling them for the extra cash you need.
  • Trim your budget: See if there are any of your expenses you can trim or cut completely. Look at your subscriptions and memberships, ways to cut your utilities, among other things that may save you some money.
  • Borrow from family: Before borrowing, if you are comfortable doing so, ask a friend or family member for help. Most of the time, family members and friends aren’t aware of your financial situation because it isn’t something that is talked about. Explaining your situation and asking for help could prevent you from going into debt.

Before taking out any type of loan, be sure to do your research and make sure it is the right financial decision. Nine times out of 10, taking out a loan won’t further your debt freedom journey. It will only hinder it. Consider your alternatives, interest rates, and other factors before going all in.

Readers, have you heard of tribal installment loans before? Have you ever considered getting one?

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Self Lender Reviews: Building Credit With a Loan

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Self Lender reviews

Self-lending via credit builder loans has typically been something that small community banks and credit unions handle. However, with the increasing use of the internet to lend and borrow, Fintech startups such as Texas-based Self Lender are increasingly moving into the credit building loan market. So, what are Self Lender reviews saying? And is this the right option for you?

About Self Lender, Inc.

Self Lender, Inc. is a new venture capital funded startup that focuses on helping individuals build credit while saving instead of racking up debt. They’ve been able to leverage modern FinTech to come up with a solution to every debt-free family’s conundrum: pay off debt or build credit.

Incidentally, you may be thinking you don’t need a loan, and you’d be right, but there are still plenty of instances in which you’ll need a good credit score. For example, some jobs require good credit scores. Bad credit can make borrowing a lot more expensive. Credit builder loans are a bit unusual, but they work.

How Does Self Lender Work?

You’re probably thinking, “I’ve never heard of a credit building account before.” However, credit building loans have been available through traditional banks and financial institutions for years. They’re often called “CD-secured loans” or “savings-secured loans,” since they’re secured by a Certificate of Deposit (CD)

By opening a Credit Building Account with Self Lender, you are committing to putting a certain amount of money into the account each month. Think of it as a savings account.

You choose from the options available and then make the agreed-upon payments each month. Then commit to a term. Self Lender deposits the amount of the loan into a CD for you. Then you make payments for a specific amount of time. After the term is over, you can cash out the CD and either spend it or transfer it to a different type of savings account.

There is no hard credit pull to get started, so signing up won’t impact your credit score at all. And, you don’t have to have credit to get started either. You simply sign up, choose your payment plan and go.

Where payment plans are concerned, Self Lender works with your budget and reports your payments to all three credit bureaus. So, for every on-time payment, you make toward the account, the more your credit will improve.

Getting Started

self lender reviews

Signing up for Self Lender is easy. Go to www.selflender.com and choose “sign up.” From there, you’ll be prompted to enter your name and email. The site will then guide you through the account setup. You’ll need the following information handy:

• Home address
• Social security number
• Birthdate

To get started, you’ll have to pay a non-refundable admin fee between a $9 to $15 depending on the payment terms you choose. Then, you will choose a payment plan that works for you. The site offers plans with monthly payments starting at $25 and up to $150.*** Then you select a term length of 12 to 24 months. At the end of the term, you’ll get the cash you put in. For instance, a $25 contribution for 24 months will result in a $525 payout at a 14.92% APR. Or, you can put in $89 for 12 months at a 14.62% APR and receive $1,000 in savings at the end of your term.

The loans aren’t free. Self Lender charges a processing fee, and, of course, the payment structure includes interest. That said, Self Lender doesn’t charge more than 16%, which is better than alternatives like prepaid or secured credit cards, which might charge as much as 30% interest.

As a side bonus, Self Lender lets you check your credit at no cost.

While there are no guaranteed results, Self Lender reviews have shown the services are effective.

Ready to start building your credit? Apply at Self Lender today!

Self Lender Reviews

Self Lender reviews are generally favorable. On average, users have seen an increase of 45 points during the term agreement with Self Lender. Here are some other Self Lender reviews to give you an idea of how it has worked for other consumers.

“Love love love this program and this app! In eight months my credit went up a hundred and nine points. Super happy and can’t wait to renew once the first year is up.” – Debbie G.

“I recently moved to the states and had no established credit. Using this service along with two prepaid credit cards, my score went from 4 – 710 in 9 months. I took a 12 month term with only $50 payment per month but I’m already thinking about applying for a larger Self Lender loan as soon as this completes to further build my score and save at the same time.” – Neil M.

“Self Lender has been a fabulous service for me, as I have started building my credit history. I jumped 30 points over the period of my account, and I just got my savings I built deposited into my bank account! I’ve already signed up for second account, because it’s guaranteed saving that boosts your credit score! Thank you for making it easier for millennials without established history to become more creditworthy!” – Evan M.

“This really works…and pretty quick, too!! Score jumped 118 points in 4 months.
I’m using Self Lender to build credit and save money.” – Cynthia C.

So, now there is only one question left to answer: is Self Lender the right option for you?

Is Self Lender the Answer to Your Credit Troubles?

Self Lender reviews also suggest the product isn’t necessarily a silver bullet. The product has the potential to improve your credit substantially, but everyone’s credit is different. The figures published by Self Lender just show average improvement in one’s credit. Some people have seen a lot of improvement in their credit; some show more modest gains. It is also not exactly clear when the credit improvements kick in. In some cases, the benefits are immediate. In other cases, it takes more time to see the gains.

So, on average Self Lender reviews do show the product works, but it’s not clear if it works equally well for everyone and when its benefits kick in.

Also, one important requirement is that for Self Lender credit builder loans to effectively improve your credit you need to have a stable income, and you need to have a long-term planning mentality. So, if you’re not able to secure steady employment or aren’t ready to think in a one or two-year time frame, Self Lender is probably not the answer.

Other important factors to consider are frankly, your personality. Some people do better with an enforced way to improve their credit. If you treat your savings plan like a credit card payment, you may be able to save more money than you think. However, if you prefer a more independent and flexible approach to your personal finances, their credit builder loans might not be the optimal option for you.

If you are interested in learning more about Self Lender, apply here.

1 Credit Builder Account — proceeds are held in a deposit account until maturity
All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or Atlantic Capital Bank, N.A. Member FDIC, Equal Housing Lender.
*Subject to ID Verification.
**Individual borrowers must be a U.S. Citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required.
***Sample products are $25 monthly loan payment at a $525 loan amount with a $9 administration fee, 24 month term and 14.92% Annual Percentage Rate; $48 monthly loan payment at a $545 loan amount with a $15 administration fee, 12 month term and 15.65% Annual Percentage Rate.
All loans are subject to consumer report review and approval. Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report.
All loans subject to approval. All Certificates of Deposit (CD) are deposited in Lead Banks, Member FDIC, Sunrise Banks, N.A., Member FDIC or Atlantic Capital Bank, N.A., Member FDIC.

We are an affiliate of Self Lender. Although this posting contains affiliate links, the review and opinions expressed below are my own.

Guaranteed Installment Loans for Bad Credit Aren’t Really a Guarantee

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guaranteed installment loans for bad credit

If you’re hard-up for cash, guaranteed money never sounds like a bad thing. However, many creditors use the word guaranteed to lure you into an agreement that will put your farther in debt for a longer period of time. Here are a few reasons you should probably steer clear of guaranteed installment loans for bad credit.

There Are No Guaranteed Installment Loans For Bad Credit

Not everyone is guaranteed to be approved for the money they need. If you have bad credit and are unable to get loans elsewhere, there is probably a reason why. Anyone guaranteeing you a loan should be approached with caution.

It is also important to keep in mind that even though a company says it can guarantee you a loan with bad credit it may not be able to finance the amount you need. For instance, if you need $5,000 desperately for some type of emergency but they were only able to finance you for $1,000, that wouldn’t be very helpful. You’d only get a portion of what you needed and wind up paying a ton in interest.

Many Have High-Interest Rates

Oh, yeah. Most installment loans for folks with bad credit are extremely high-interest. In many cases, they have more than 26% interest. This makes them practically impossible to pay off. You’ll also have another item on your credit report for up to six years, depending on how long it takes you to pay off.

They Aren’t Interested in Your Financial Well-Being

Lastly, companies offering up guaranteed installment loans aren’t interested in your financial well-being. If they are guaranteeing anyone money it means they are not interested in your ability to pay it back. The last thing any of us needs is a collection account hanging over our head.

What To Do If You Need Cash Now

Most people who are looking for installment loans and have bad credit don’t have great money habits, to begin with. That doesn’t mean you don’t have options though. If you need money right now, here are a few things to consider.

  1. Sell items around your home you don’t use anymore. You’d be surprised how many people would pay for things collecting dust around the house.
  2. Ask a family member or friend for a loan. Many friends and family will understand you are in a tight spot. Just make sure you set up a plan to pay them back. This will prevent you from paying interest or having additional items on your credit.
  3. Get someone to co-sign a loan for you. This can help decrease your interest rate as well as help you increase your credit score (if you make on-time payments).

More importantly, if you find yourself having trouble with money on a regular basis, you should consider seeking the help of a professional. Getting the input of a financial advisor can change the way you manage your money and set you up on the right track.

Readers, have you ever fallen for the trap of a guaranteed installement loan?

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What Happens to My Credit Score When I Pay Off All My Debt?

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FICO Pie Chart
What happens to my credit score when I pay off all my debt?

This question came up in the Our Debt Freedom Family Facebook group recently, and I know a lot of people have the same question when getting out of debt.

So in this article we’re going to be answering the following question:

“How does being debt free affect your credit? We’ll be paying off our debt soon. When we do, we’ll keep our credit cards open, but what will my credit score look like when all the other loans are closed?”

A similar question was asked last year about how your score is affected when you close out one of your old credit cards. I wrote an article in response, and in that article, I went into great detail about how your credit score is calculated and how closing out the card affects your score.

To summarize, the most commonly used credit score is calculated using software created by the Fair Isaac Corporation, also known as FICO. Your FICO® score is determined and weighted by the following five factors:

  • Payment history — approximately 35%
  • Amounts owed — approximately 30%
  • Length of credit history — approximately 15%
  • New credit — approximately 10%
  • Types of credit in use — approximately 10%

If you close out all of your cards, pay off all of your loans, and never use credit again, eventually, the reporting agencies won’t be able to provide a score for you.

However, if you leave your cards open and use them once in awhile and keep them paid off, your credit score is likely to be very high.

In fact, I recently interviewed Christine Odle who paid off $500,000 worth of debt (house and everything) since 2009. She said that she has one credit card that she pays off several times each month, and her score is over 800.

[bctt tweet=”What happens to my credit score when I pay off all my debt?” username=”MonicaRLouie”]

My husband and I also have one credit card that we use and pay off each month (in addition to our mortgage) and our credit scores are over 800, as well. We’ve definitely seen our credit scores increase as our debt total has decreased over the past few years.

My question to anyone else concerned about their credit score is this —

Once you’ve paid everything off, do you plan to use credit again in the future? If not, then it probably won’t have much affect on your life. But if you do, it might be worth using a credit card and paying it off every month to keep that good payment history on your record.

Don’t Pay To Check Your Credit!!!

You used to need to pay to check your credit score.  Don’t do that!!  Instead, get your credit score for free.  Here are four completely free ways to check your credit score.

Annual Credit Report. Federal law says the three credit reporting bureaus must provide customers with a free credit report once per year. Just go to www.annualcreditreport.com and sign up.

Credit Karma. Credit Karma will give you your credit score for free. It also allows you to access data in your credit report for free at any time, you can check your payment history, balances and credit inquires letting you keep an eye on your credit. Sign up here.

Chase’s Credit Journey. Chase will not only provide you access to your credit score, but also gives you a set of great tools to improve your credit score.  It is 100% free to sign up.

Lexis Nexis. Another way to get a free credit report is to get your Lexis Nexis file. The report will have personal information gathered from public records and third party sources. You can get a copy of what information about you they have on file by sending in an application with your ID.

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Keep moving forward toward your goals. You really can live the life you dream about!