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Loans for People with Bad Credit

If you have a bad credit history, the most important you can do for your long term financial well-being is to repair it. But what if you have bad credit and you still need a loan?

It may see like your case is hopeless and no financial institution will work with you, but this is not actually the case. Your options will be limited and may not be ideal, but they do exist. From credit cards to home loan financing, there is help available for people with a bad credit score.

Secured Credit Cards

If you have a history of not paying your bills on time, most credit card companies will not be willing to issue you a standard credit card. Many banks, however, do offer the option of a “secured” credit card. This simply means that you secure the card by depositing money in an untouchable account at that bank. That way, if you don’t pay your credit card bill on time, the bank is at no risk; it will simply use the funds you already have on account with them.

These cards can be a lifesaver for people who can’t get a credit card otherwise. Not only do they mean access to services that can only be secured using a Visa or Mastercard, but they also represent a way to repair your credit history. As long as you pay your new credit card bills on time, you will begin to look like a person who handles his personal finances well.

The disadvantage of using a secured credit card is that it is costly. Not only do you have to put money in the bank and leave it alone, you can expect to earn low or even no interest on that account. Even worse, a credit card for people with bad credit can have a high annual fee and a much higher than average interest rate. It’s in your best interest to get a standard credit card as soon as you have repaired your credit history enough to qualify.

Home Loans for People with Bad Credit

This presents a bigger challenge than does the credit card issue, but there are two major solutions out there:

• Veterans’ Administration Financing
• Owner Financing

Only veterans will qualify for VA financing plans, but if you have served in the United States armed forces and been honorably discharged, they are among your options. VA loans typically have low interest rates and easy terms, and with VA financing, it’s possible even for people with bad credit history to qualify for some kind of a loan.

Most people aren’t veterans, though. In that case, you may have to limit your home purchasing choices to those houses that offer owner financing. This means that the owner is willing to sell you the house on terms without any bank being involved at all.

Often, such homes would not qualify for a bank loan in any case. They may be old, or in need of serious repair. For example, the problem may be that the home needs one specific repair, such as a new roof, and the owner either can’t fund one, or for some reason chooses not to. It can all add up to you being able to purchase the home using owner financing and avoid the bank altogether.

About The Author

Ben Todd

Ben was a seriously broke graduate student with bad credit who after finding himself rejected for any sort of credit card or loan for most of his adult life, finally decided to get his financial life in order. 'He spent several years reading as many financial advice books and blogs as he could.And suprisingly, Ben found he actually LIKED the topic of personal finance; after fixing his own finances, starting his own successful work at home website business, and using his earnings to get out of debt, created echeck.org to help others do likewise!

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