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Low Credit Score = Loan Rejection? Not Anymore!

Jul 11, 2018

You need money but you have a bad credit? Nothing to feel helpless. Turn to bad credit loans.

A bad credit loan sometimes referred to as “no credit check loan” is a kind of loan that is given to borrowers with bad credit ratings. Various financial institutions like banks, online lenders, credit unions offer these loans for people with poor credit.
Bad credit loans are ideal for those with a low CIBIL score. The lender doesn’t verify the credit score of the loan seeker. The lender accords the loan with no check, but at a higher interest rate and with a verifiable income proof.


  • The loan is conceded irrespective of the borrower’s shoddy credit history
  • The loan is disbursed quickly
  • The loan comes with a much higher ROI compared to normal loans
  • The loan gives the borrower a flexible repayment tenure
  • Available for a bigger magnitude of loan amounts


  • No requirement of a good, up to the standard credit history
  • Quick loan approval, sanction and disbursement
  • Available with higher loan amounts
  • Variable and accommodating payback periods
  • Lesser documentation and paperwork 
  • No need to pledge any collateral
  • No chance of seizure of an asset
  • Fixed rate of interest

In addition to their suppleness, a bad credit loan bears a greater likelihood to be approved in contrast to other loans. This helps you to maintain your credit standing. If you repeatedly apply for loans and they end up getting rejected, your credit report is most likely to get impacted adversely.

Read Also - How someone can get loan in spite of having a poor rating


  • The loan terms are unfavourable and primarily set by the lender. Since the loans are granted to borrowers with bad credit and without the consideration of any linked indemnity, the terms and conditions usuallyhinge on the lender’s favour.
  • Bad credit or no credit check loans have much higher interest rates. 
  • The tenure for loan repayment is also very short.

Types of bad credit loans

Loans for people with poor credit are available in two categories:

Unsecured bad credit loan: Here the borrower signs a contract and guarantee repayment of the loan according to its terms and conditions. In the event of a non-fulfilment in repaying the loan, the lender may chase a recovery of the owed amount through collection agencies or legal procedures. Typical examples are personal loans, student loans, and credit cards.

Secured bad credit loan: Here the borrower puts an item like house, car, or jewellery as collateral to fortify the loan. In case, the borrower fails to pay back, the lender is legally authorized to sell the collateral to retrieve the losses. Typical examples are mortgages, car loans.

How to choose a friendly lender?

The first and foremost factor that you and the lender should assess is your ability to afford the loan. A lender who is socially responsible will check your income, your bank statements before deciding whether to approve or reject your loan proposal.

Also Read: 10 Details About Home Loans

If you carry a bad credit score and need a loan, decide upon a lender who provides flexible personal instalment loans, not payday loans. A payday loan can grossly ruin your expenses. Four out of five payday loans get renewed or rolled over. Instead, tie-up with a lender who offers you instalment loans those mainly translate into more affordable low monthly payments and with moderate interest rates and longer terms.

Choose a lender who shows eagerness in regularly reporting your timely payments to the credit bureaus. This improves your sub-standard credit score over a period.

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