What is a credit score, and why does it determine if you will get a loan or not?
A credit score is a numerical value assigned to you after analyzing your finances to estimate your creditworthiness. Simply put, it is a number that lets lenders know how eligible you are for a loan.
To consider a bad credit score, the numerical value of the credit score must be below 580 on a 300-850 scale. People within that low range are at credit risk and are usually tagged as defaulters on their loans.
Some of the factors that can lead to bad credit scores are the history of late bill payments or considerable debt. In Canada, a score of 574 or less on a 300-850 scale automatically brands you as financially irresponsible by banks, landlords, lenders, and some employers.
A bad credit score could severely hurt your chances of getting financial assistance if you are in dire need of a loan. For starters, banks can send you on a futile chase by turning down your loan application due to your bad credit score.
However, companies like GoLoans can decide to forego your score and offer you some short-term installment loans for bad credit. We believe that a number shouldn’t hinder your financial assistance.
To assist, we have listed some types of short-term installment loans for bad credit in this article you could apply for.
Short-term installment loans for bad credit scores
Here are several short-term installment loans available for bad or low credit scores.
Unsecured Loans
Banks, credit unions, and online lenders can offer you unsecured personal loans for your bad credit score, and repayment can happen in 2-7 years depending on the lender.
Unsecured loans are loans for which collateral is not required. Instead of using the borrower’s assets as collateral, unsecured loans are approved based on the borrower’s creditworthiness.
Secured Loans
Secured loans are personal or commercial loans that demand a specific form of collateral such as real estate and vehicles or cash as a condition of lending.
If you wish to loan a substantial amount of money to purchase a specific asset or if your credit score is not good enough to qualify for an unsecured loan, a bank or other lender may require collateral.
Car Loans
These loans can be taken to purchase a new vehicle, and you may repay installments monthly for 12-96 months, depending on the lender.
Your recently acquired vehicle serves as security or collateral for an installment loan, and the lender may reclaim it if you fail to maintain the repayment schedule.
Mortgages
Mortgages are short-term installment loans taken to buy a property or a house and can be repaid within 15-30 years with monthly regular payments.
Failure to meet the payment schedule on a mortgage loan means that your new house will act as collateral.
This type of loan usually has a lower interest rate since they are secured loans and often come with a fixed payment rate.
Lenders will run credit checks and assess your income and employment status to guarantee timely payment.
Personal Loans
Personal Loans provide funds that can be utilized for a variety of purposes such as consolidating debt or covering sudden, unforeseen needs such as medical bills. And you may typically obtain a personal loan regardless of your credit score or repayment history.
A personal loan typically does not demand collateral, such as your car or home. And the greatest thing is that installment loans typically have far lower rates of interest and fees than payday loans.
Credit Cards
Other banks will offer credit cards to you with bad credit and resources to help you rebuild your credit status.
However, credit card loans can only improve your credit if used wisely because the APR is high.
Cash Advances
Most credit card issuers offer cash advances, while online lenders give short-term cash advance loans. However, they are more expensive than secured or unsecured personal loans and have high-interest rates.
If you wish to get a short-term installment loan online with a low credit score, GoLoans can provide you with what you need.
Start your application with GoLoans and get approved within minutes.
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