A credit score is a three-digit number that banks and lenders will use to determine how likely you are to repay the debt and hence will affect the approval of your loans and credit limits. This score is based on your timely repayment of loans, and maintenance of all accounts in good standing.
This number is not affected by your religion, race, gender, the nation of origin or marital status. Credit scores range from 300 – 850 and anything above 700 is considered to be a good credit score. The interest rates also tend to increase when your credit score is on the lower end.
Credit scores can also fall on the lower side in case you are a student with no past history of established credit. High credit balances, late payment, and partial payments are also reasons that can add up to a low credit score. A lot of times this is circumstantial and having a backup plan such as a loan for people with bad credit scores can be highly beneficial.
Getting loans with bad credit scores
If you are an individual with your credit score on the lower end and are in need of money, there are ways to obtain a loan even with your score. It is hard to imagine getting a loan approved if you are a person with a bad credit. Although this can be true, there are also lenders who approve loans for people with horrible credit, exclusively. This can make a world of difference as the money you borrow can be used at your convenience to purchase a vehicle, or to pay bills.
The bad credit loan can be a lifesaver in situations to help you cover the piling unpaid bills or your credit card. As you have the liberty to make use of the money in any manner as long as regular repayment is done, you can even use it to create opportunities for yourself in the future. This also helps you start from scratch and redevelop your credit score and hence restore chances for a higher credit card limit and approval of other quick cash loans.
Credit checks- soft checks and hard checks
Prior to getting a loan approved, there will be a credit inquiry performed on you. It is integral to know about the types of inquiries before you apply for credit. Some can be considered as regular checks and do not impact your credit score in whatsoever manner while some are called hard checks and they can show up on your credit score, bringing it higher or lower.
In order for approval for loans for people with bad credit, there are lenders who can process the application based on the soft credit check alone. This can be useful as a hard check can further affect the credit score, which is a matter of concern for a person with credit scores already on the lower end of the spectra.
A soft credit check is a type of inquiry that does not reflect upon your credit score and only shows up in your internal report. This also occurs in relation to credit card limit, when the issuer conducts regular soft checks on you, which can affect the credit limit to go higher or lower.