Bad Credit Loans - Loans for People With Bad Credit

A loan for bad credit is given to a person or business with a poor credit rating. Getting such financing is not an easy task. Most big financial institutions will not give you financing if you have a poor rating.

How does one get a bad credit history?

• You make a late payment
• Default on a loan
• Miss scheduled payment

How to get a financing with no credit

If you are trying to get personal financing, then it's likely that your local bank will turn you down. The good news is that even if you have an exceptionally poor standing, getting financing from major banks like Royal Bank, BMO, TD Bank, CIBC or Scotiabank is not your only option.

Getting financing might look hard to accomplish, but it's certainly doable. There are many lenders specializing in such lending (frequently called sub-prime lenders). There is a catch though – when getting a credit you will be paying higher interest rate compared to a borrower with pristine credit history. This simply compensates the lender for the risk of loaning money to a non secured borrower. Another thing to consider when applying for financing is that the maximum amount you can borrow will be less compared to as borrower with a perfect credit.

Types of loans considered difficult to obtain

There are 2 types of financing you can get – secured and unsecured:

• A Secured credit is simply a loan given to somebody with poor standing, which is protected by an asset owned by the borrower. If you apply for this and you own a house, you can get financing and use your house as collateral. You can also get a secured credit card, which will be secured by a cash deposit.

• Unsecured credit is the second type and to be honest with you, chances to get financing like this with poor credit are slim to none. A borrower who does not have a collateral represents a great risk for the lender, hence the difficulty in obtaining a loan in this case.

The silver lining is:

If you are approved to get financing, you will have the chance to repair your damaged credit history by making regular on-time payments towards it. If you look at your financing as your ticket to a good credit history, then you will do just fine.