You can qualify for an unsecured loan by maintaining a decent credit score, borrowing history, and income. Fortunately, there are even unsecured loans that are designed to help borrowers with low credit scores.
Unsecured loans are ones that don’t require any collateral. This means you won’t have to offer up a valuable item in order to be approved. These loans are offered based on the borrower’s credit and borrowing history as well as their promise to repay. This means that the application and approval process may be more strict for an unsecured loan. But it depends on the type of loan and the lender.
A secured loan on the other hand is one that requires collateral. Common examples include title loans, pawn shop loans, auto loans, and even mortgages. For these loans, the only way to get approved is to have some sort of collateral. A title loan, for example, requires the borrower to offer up the title to their vehicle. This means that if the borrower can’t repay the loan, the lender can take their vehicle away and sell it to recover their money.
Getting a good unsecured loan with a low interest rate and favorable repayment terms will require you to have a good or fair credit score. Many lenders base approval on your credit score because it’s a good indicator of whether or not you make payments on time. Common unsecured loans for borrowers with good credit include traditional bank loans and credit union loans.
If your credit score is less-than-perfect and you’re looking for an unsecured loan there are still options for you. One popular choice is a personal installment loan. These are unsecured personal loans designed for borrowers with poor credit who need emergency cash. They tend to offer more money than payday loans, and a longer repayment period as well. And the best part is that you can usually get approved for one even if you have bad credit.
Bad credit is definitely difficult to deal with in the moment. Luckily, there are ways to improve your situation and get your finances back on track.