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Articles » Low Credit Score Loans | | What Is A Low Credit Score and How Can One Obtain Loans With Bad Credit? |
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If you have a low credit score but need to obtain credit, there’s hope. With the current financial crisis and subprime fallout, more consumers are experiencing difficulties, and while traditional lenders will not lend money and loans to low scorers, there are still many that will. Here you will find out how you can find loans with a low credit score.
The Fico credit scoring system is usually classified into these categories:
• Above 750 = excellent credit
• 720-750 = very good credit
• 660-720 = good credit
• 600-660 = fair credit
• 500-600 = poor credit
• Below 500 = very poor credit
As an example, while a credit score of 390 is extremely low, it is still possible to get loans with that score. Low credit score loans will have a higher interest rate and shorter repayment terms, but if you need additional credit this is the best option – rather than dipping into your retirement savings or 401K, or going into foreclosure.
You have several loans options, depending on your needs. If you want to buy a house, you can apply for FHA loans , which is probably the best option you can find because it is low credit score friendly, allows down payments of as low as 3%, and has good interest rates.
If you’re a Veteran or a serviceman you can apply for VA loans, which allows military personnel to borrow money to buy a home, with the new house as collateral.
Another option is to apply for a home equity line of credit (HELOC) with your current home as your collateral. This is particularly useful if you need access to credit several times. HELOC loans allow you to borrow money, pay it back in part or in full, then borrow again.
For small cash amounts, you can apply for a cash advance or payday loans, which is payable on your next payday or up to a month maximum.
You will need to shop around for lenders offering special loans for low credit scorers to make sure you get the best deal. When you do get the loans, you can use it to build up your credit score again by ensuring that you always make your payments on time.
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