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How to Apply for an Unsecured Bad Credit Loan - Unsecured Loans Now Articles Unsecured Loans Now Articles

How to Apply for an Unsecured Bad Credit Loan

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Posted on 2nd January 2012 by Sandra Thompson in unsecured loan |unsecured loans

Having bad credit can be a major obstacle when applying for credit or financing. For people with bad credit who need help, there are lending companies that offer unsecured loans.  An unsecured loan is much easier to acquire since no collateral is required to guarantee repayment.  However, some lenders only accept customers with good credit so if you have bad credit history or a poor credit score, your unsecured loan application may get rejected.

What are some of the things you should remember when applying for an unsecured bad credit loan?  Here are some tips:

Check your report.  Are you sure that all charges and details in your credit report are correct?  If not, those errors can dramatically pull down your credit score.  The Fair Credit Reporting Act (FCRA) states that all consumers have the right to dispute credit report errors by sending a letter to the bureau that issued your report.  Fixing errors in your personal credit report can instantly boost your score and win you a better interest rate when negotiating with a prospective lender.

Shop around and compare.  Another important step is to compare unsecured loan deals.  The rates, fees, terms and conditions vary from one lender to the next.  The only way you can be sure that you’ve found a good deal is by comparing available offers in the market.

However, do not submit multiple applications to different lenders at once as this can do more damage to your credit score.  Keep in mind that with each application you submit, an inquiry will be made to your credit report, causing you to lose a few points from your score.  Thus, submitting too many applications can seriously hurt your rating.

Choose a loan with a fixed rate. Loans with variable interest rates may start out low but the rates are bound to increase as the Prime Rate increases.  This is why it’s best to choose a loan with a fixed rate of interest so you can be sure that your monthly loan payments will remain the same from the beginning until the end of your loan’s term.

Be ready for repayment.  Before obtaining an unsecured loan, see to it that you can afford repayment.  You might need to make some adjustments or changes with your current budget plan to make room for your monthly loan payments.  It’s very important to create a definite and realistic repayment strategy that suits your financial situation.

Use the loan to rebuild bad credit.  Although unsecured loans for bad credit typically carry higher interest rates, they can come in handy during times of emergencies.  You can also use your bad credit unsecured loan to boost your credit score.  How? By promptly submitting your monthly loan payments.  Six months after getting approved for an unsecured loan, check your credit report to see your progress.  If you are consistent with your unsecured loan payments, you should be able to regain your good credit standing after 12 months.

About the Author

Sandra Thompson is a loan consultant with http://www.unsecuredloansnow.com and has been providing consumers and business owners with Unsecured Loan since 1989. For years she has helped people with loan and credit problems especially pertaining to Unsecured Personal Loans, Student Credit Cards and Unsecured Credit Cards. Copyright 2012.

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