The ABC’s of bad credit loans

With the number of growing credit cards, it is becoming difficult to manage some of the huge expenses. If the recent research says, more than $1 trillion is the debt balance that the Americans are expected to pay by the end of this year! The number is simply growing. The consequences of this are much of the population is falling to the bad credit segment. When half of the amount is going into the credit card payment, there is obviously no amount left for sudden expenses.

This day getting money has become simpler. Whether one needs a huge chunk of money for a sudden expense or paying off the debts, there are several ways to cope with it.

One of the interesting ways of borrowing money is the bad credit loans.  Often reputed sites offer these loans with longer terms and offer larger amounts with APRs up to 125% lower for those who have bad credit.

  1. Understanding bad credit loan

Bad credit loan is a personal loan. It is offered to borrowers who do not have a strong, bad and cannot get any credit from any institution. For such borrowers, there are various kinds of financial institutions like credit unions or banks who are ready to offer Quick bad credit loans.

There is no doubt that these loans are expensive. The rate of interest is high. In order to adhere to the FICO (Fair, Isaac, and Company) score, a borrower’s score must be above 630 to be into the good credit score. This means anything below 630 is considered bad.

There are different ways to understand the score. For instance, the borrower’s bank account or the credit card statement will help know the credit score.

Ideally, those between the credit score of 850 to 720 are regarded as great credit. While a credit score of 550 is bad credit. Any number below 550 is a poor credit line. Bad credit tells the lender how much you are in debt. It lets the lender know the history of how a borrower is being paid off his debts. Whether the borrower will be in a position of pay off the debt or not? All this and many more questions run in the minds of a lender while lending the money to the borrower. This is probably one of the reasons why bad credit loans are sanctioned at a higher interest rate.

  1. The options available for borrowers with bad credit scores

It is not that a borrower with bad credit cannot get loans. But as mentioned above, the loans are given at a higher rate of interest. There are two types of bad credit loans that a borrower is eligible for.

  • Secured loans-

These are the loans where the banking institution looks forward to some kind of valuable item as collateral. These items could be in the form of mortgages, pawnshop loans, car title loans etc. The items for the collateral could be a car, or home, jewelry or any other item that may be equivalent to the loan amount.  It is taken as collateral for in the event of non-repayment of the loan amount, the items can be seized. The amount received on selling the collateral is then taken to recover the lost amount.

  • The unsecured loans-

Under this kind of loan, the lender does not take any collateral but the borrower has to sign a contract that states he must adhere to the terms and conditions of the loan. On the failure to repay the loan amount, a collection agency or legal actions are used.

Thus, a bad credit score borrower can opt from Payday loans to title loans, cash advances or bad credit installment loans.


  1. How to look for a lender who can provide with a bad credit loan
  • The lender should offer bad credit installment loans

When a borrower goes to borrow an amount, he or she should be allowed to pay the amount in easy installment form. This can be for a longer term. It becomes easier for the borrower to pay in easy installments.

  • Borrow a loan amount that is repayable

One of the strangest mistakes that most of the borrowers do is to borrow a loan amount beyond their repayable capacity. Regardless of the fact how tempting the offer for a bad credit loan may be, sticking to one’s repayable capacity is important. Failing to do so can often make a borrower fall prey to re-borrowing and extending the life of the loan.

  • Avoid falling prey to predators

The market is buzzing with predators that with false promises make people with bad credit suffer. The right way to know if your lender is socially responsible or not is to see when he or she checks your credit score. Also, opt for a soft credit check and not the hard credit checks that remain in the credit report for up to 24 months.

  • Choose a flexible term and plan your own repayment

When there is a choice of selecting the terms and repayment structure, it is often recommended to avoid high APRs (Annual Percentage Rate). When you opt for short terms, the APRs are high. It becomes difficult to make payment on time hence.

  • Always update the credit score to the credit bureaus

Bad credit loan means the borrower has had a bad history of non-payment of loans or delayed payment of loans. But when the repayment is done for the bad credit loan, it is best to see that the update at the credit bureaus is made. This will help improve the credit score for future needs.

Concluding lines

Whenever you seek for a bad credit loan, make sure the lender is from a reputed company. Although getting a loan is not a problem, but it is advised to go for bad credit loan only when there is a requirement for emergency funds.

More articles coming on this. Stay tuned for more updates.

Guidelines and Regulations Debt Collection Agencies Must Follow

When Can Collection Agencies Call Me?

The collection agencies are allowed to contact the debtor via mail, fax, phone or telegram between 8 a.m. and 9 p.m. But the debtor can refuse to respond to phone calls at certain places, such as work. The debtor may request for the contact to stop at which time the collection agency must refrain. urges a written request be sent to the collection agency to cease the phone calls.

Can Collections Agencies Contact My Neighbors?

If the individual in question has an attorney to represent him or her then the collection agency must contact the attorney instead of the debtor himself. Third party such as family member, colleagues or employers can be contacted only to obtain the contact details of the debtor, such a contact is allowed just once and if the collection agency needs to contact the third party more than once then the consent of the party is a must.


It is against the law for the agency to disclose or discuss the debt with any of the third party. If the collection agency contacts the employer or co-workers of the debtor then it must be only for verification purposes.

Can Collection Agencies Make False Claims and Deceptive Tactics?

The law forbids the collection agencies from threatening or employing tactics that could harm the debtor or the debtor’s family in any way. Threatening the debtor with arrest or seizing paychecks or property is strictly prohibited under the Fair Debt Collection Act.

The agency is also not allowed to claim to be representatives of the government or a legal institute. False legal documents or postcards cannot be mailed to the debtor by the agency and they cannot charge the debtor for any fee or skew the actual amount owed to the creditor.

What Can I Do to Combat Collection Agency Harassment?

If any of the debtor’s rights under the law or the Fair Debt Collection Act are violated, then the individual can file a suit against the collection agency within a year of the date the violation occurred. Based on Family Credit Management, the court can award financial damages to the petitioner who wins the case and also reimburse their attorney’s fees and other costs incurred in the case.

How to Report Collection Agencies that Violate the Law

The debtors can also report the collection agency violating the law to the Federal Trade Commission or the office of the state’s Attorney General. You may file a complaint online on the FTC website or contact their Consumer Response at (877)382-4357. If you want to send a written correspondence then you may do so through post.

Pick a Loan from the Lending Tree: Review

There’s a good chance you have heard of Lending Tree ( If you haven’t, it isn’t due to lack of money spent on advertising on their part. Lending Tree is basically a place you can go to get referrals from many major lenders when looking to finance or refinance your home, buy a boat, buy a car, etc.

Pick a Loan from the Lending Tree: Personal Experience and the Process

It should be noted that I do not get any type of referral fee or compensation of any type from Lending Tree. This is strictly a fair review based on my personal experience and what I was able to glean about the company from my application through them a few years ago.

Getting signed up at Lending Tree is pretty quick and painless. You simply go to their site and fill in all your information. Some people become a little apprehensive in giving out details over the Internet, but with Lending Tree they have put all the proper safeguards in place so that you can submit your information in a perfectly secure environment.


Just use the drop-down lists they have to identify the type of loan you are seeking, as well as the state in which you reside and any other information required for the type of loan you are coveting. Hit the button to get started and you are on your way.

Pick a Loan from the Lending Tree: What to Expect

The one thing I will say with certainty is that, while Lending Tree is definitely a place you should look into when in need of a loan, do not restrict yourself only to the lenders that they send to you. To be honest, the companies that I made contact with through Lending Tree had decent rates and acceptable enough deals, but they really didn’t stand out to any great degree over what I was able to find locally.

Use the quotes you get from Lending Tree lenders as a good jumping-off point of what to expect as terms, but then definitely compare that information to what you can get locally.

As far as the number of lenders who will contact you, prepare to be deluged. The good thing is that these are real, reputable companies. The downside is, some of them are overly persistent.

Lending Tree seems to be on the up and up with their Internet practices. I only received genuine offers and have not experienced any SPAMming or anything even slightly nefarious since my dealings with them.