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Loan Options for Bad Credit

For those who are coping with bad credit, I know how difficult and frustrating it can be to get a "yes" from a lender. Moreover, the constant rejection can be humiliating and degrading for subprime borrowers. Before you decide on the type of loan that you'd like to apply for online, it's crucial that you get the facts and research your borrowing options so you can make the best financial decision possible. When shopping for a direct loan, you'll discover quite a plethora, each with varying terms, conditions and interest rates. These factors will cumulatively determine your total expense during the life of the loan.

By definition, a loan is considered to be "unsecured" when it is not backed by personal property as collateral; rather, it is extended to you by the lender with just your signature on a promissory note to repay the money according to specific terms, rates, and a payment schedule. Keep in mind, when you need a loan quickly, cash advances are certainly convenient and easy to qualify for, but we caution that these loans come at a high cost with governing laws that vary from state to state. Although they do serve a valid purpose, they should be used sparingly or for emergencies. The small, short-term loans like the ones we've just described, typically range from $100 to $5,000. For larger amounts, lenders may require better credit scores and a proven ability to repay, such as verifiable employment and adequate income. Amounts above $10,000 will inevitably require "good" credit.

First Choice connects you with the right lender for your needs. The process is simple, with immediate acceptance in most cases. Although approval is not guaranteed, you will be simultaneously considered for a payday loan alternative in the event that you do not qualify. To qualify for loans of $10,000 or more, good or excellent credit may be required. If your credit score is lower, short term cash loans are available.

  • Bad Credit is OK
  • Unsecured Installment Loans
  • Terms up to 60 months
  • Instant online acceptance


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What Are the Credit Score Ranges?

If you find yourself in need of money and begin a search for a loan, it's crucial that you know how potential lenders will view your credit-worthiness. Your credit score is more than just a number: it's a reflection of your financial history and is an important factor in deciding whether you get approved for credit cards, mortgages, and so much more. So why does it seem so tricky to understand what your credit score really means? To get a better idea of what that number tells a potential lender, let's explore the various credit score ranges. There are a few slightly different ways to model a credit score, but the FICO Score® is the most widely used, so we'll be taking a look at that.

Excellent Credit -- 800 to 850

If you've got a credit score of 800 or higher, you're sitting pretty in the top tier of borrowers. You'll have a strong chance of getting approval for new lines of credit, mortgages, etc., and you can expect great terms and low interest rates. People in this credit range usually have a long and (mostly) spotless credit history, with multiple lines of credit, a proven record of making payments on time, and few (if any) instances of accounts being sent to collections. Remember that it's entirely possible to raise your credit score over time, so don't worry if you don't yet fall into this range.

Very Good Credit -- 750 to 799

Individuals with credit scores in the 750-to-799 range are in pretty strong shape as well. There are probably only a couple of minor things separating these people from excellent credit - the occasional late payment here and there, or perhaps periodic gaps in employment history. Most lenders don't differentiate much between "excellent" and "very good" credit, so borrowers with a credit score in this range can expect similar options and treatment, more or less, as those with credit scores of 800 or more.

Good Credit -- 700 to 749

A "good" credit score will allow you to get approved for most of the credit lines and loans that you apply for, although you'll probably have to pay a slightly higher interest rate than those who fall into the higher categories. Your score might be reflective of a financial rough patch sometime in the past, or perhaps a recurring pattern of slightly late payments. In the end, a credit score in this range isn't likely to cause any serious problems. There's room for improvement, but you probably won't be seriously inconvenienced as a result of your score. It's when your credit falls even lower that you start to run into real issues.

Fair Credit -- 650 to 699

When your credit score falls below 700, potential lenders start to look critically at the details of your credit report. You'll still qualify for a reasonable number of loans, but it's unlikely that you'll get good rates, and you may even be asked for an early down payment. This is also where you might start to encounter problems landing work in fields that demand a lot of responsibility and a solid credit history, such as in the financial sector. Focus on reducing your debt and making payments on time, and you should be able to bump your credit score back up over the next several months.

Poor Credit -- 600 to 649

If your credit is in this range, it probably means you've had frequent or ongoing credit issues. Things like missing payments on credit cards and loans, having accounts sent to collections, or having to file bankruptcy are all possible causes. Getting any sort of loan or new line of credit can be tricky in this situation. You'll be at the mercy of the lender's terms, may need to make a substantial down payment or put up collateral, and may need to get someone else to co-sign as well. Expect to pay higher interest rates compared to your peers with better credit.

Very Bad Credit -- 300 to 599

When your credit score falls below 600, you'll find it extremely difficult to get a loan from anyone other than lenders who specialize in so-called "payday loans" (usually at ridiculously high interest rates that can trap you in a vicious borrowing cycle). Simply put, if your credit score falls in this range, you won't have many options for borrowing. And it's probably not a good idea to borrow more at this point, anyway.

Is Having "No Credit" the Same as Having "Bad Credit"?

There are considerable differences between having bad credit and the mere lack of an established credit history. Many young people who are just starting out, for example, may not yet have a sufficient credit profile, and this is not the same as earning a lengthy, bad-credit profile marred by poor debt management, late payments, collections, and excessive spending accounts. Your credit is scored by the credit bureaus based on account handling. Theoretically, a person with a newly established credit history and only one or two accounts contained in the credit profile could have a "good" score. Lenders don't look only at the score, however. They will see additional information, such as the length of time since credit was first established for instance, and may deny you for a large purchase until you have gained more credit experience.

Granted, the outcome of a loan application submitted by someone who does not have a sufficient credit history can be the same as that for bad credit. However, the processes to remedy the two are entirely different. The person with a bad credit history has their work cut out for them; they must change their spending and repayment habits, bring down their debt ratio, and improve their overall handling of accounts. It can take a very long time for changes in spending and account management to have a positive impact on a credit score. On the other hand, the young person who is simply lacking a credit history can take steps to create a positive credit profile, such as obtaining a small loan, or a low-limit unsecured or secured credit card.

A lender will often work with those who are just starting out to help them obtain a reasonable line of credit within their budget, enabling them to establish a credit file. If you find yourself in this camp, take care of your accounts from the beginning; you don't want to go from "no credit" to "bad credit" because you made some careless errors from day one with the handling of your new credit card or loan account. Above all, keep your spending under control. The ideal credit utilization ratio (the ratio of your used credit to the total available) should be 30% or less. If you find yourself maxing out your cards and making late payments, your credit score will suffer and you will not be able to purchase the larger items that really matter (when you're ready to buy a nice car or a house, for example).

Personal Loan Calculator

With this calculator, you can analyze an existing loan or potential scenarios for a future loan. If you know your credit score, you can adjust the expected APR up or down. You can also use our credit score calculator. All of this information will help you plan and budget your finances.

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Beware of Loan Scams

Protect yourself and your finances from fake lenders and low-life scammers. Make sure to read up on scam techniques, such as their use of legitimate company names and logos, stolen from real loan companies, in order to hide their illegal operation. Educate yourself about foreclosure fraud, advance fee loan scams, and identity theft, so you'll be better able to recognize red flags when you see them. You will be able to fend off the bad guys who take advantage of the desperate and vulnerable.