Bad credit installment loans are personal loans designed specifically for people with lower credit scores, or with imperfect credit history or no credit history. Some online lenders market installment loans to borrowers with low credit scores. You need a credit score of at least 580 to qualify for a decent installment loan from a major lender. However, you will likely need a higher score to get a personal installment loan with no opening fee and with a low APR. It's true that bad credit installment loans are available, but you'll have to do your research and compare several options.
Each lender has different eligibility requirements, so check to see which one you might qualify for if you have an unstable credit score. You can also expect your installment loan to have a higher interest rate and possibly more loan fees, such as opening fees. Installment loans can help improve your credit score by adding a history of on-time payments to your credit report. They can also expand your credit mix, which is a credit rating factor that takes into account the types of accounts you own, if you used mostly credit cards in the past. Bad credit installment loans are loan products designed for people who have lower credit scores and may not be approved for other types of loans.
Usually, these loans have higher interest rates because the lender believes that you are taking a little risk by lending you money and is using higher rates to help ensure that they can cover any losses. If you want an installment loan to build credit, you should always consider an auto loan. This type of loan meets the requirements we mentioned above more often than other types of loans. Make all monthly payments on time to make the most of the opportunity to increase the credit offered by an installment loan. Honestly, any personal installment loan with sky-high interest rates isn't a good option when you're trying to rebuild your credit score. A temporary drop in your credit rating may occur when you open a new account due to the decrease in the average length of your credit.
When you don't have credit or minimum credit, these installment loans can help you build your credit profile. Financial institutions offer two types of accounts to help people create or rebuild their credit: credit-building loans and secured credit cards. Actual loan offerings and loan amounts, terms and APR rates may vary depending on the review of LendingPoint's rating and underwriting system of your credit, financial situation, other factors, and supporting documents or information you provide. Your actual rate will fall within the range of rates listed above and will depend on a variety of factors, including assessment of your creditworthiness, income, and other factors. If you can't find an installment loan that meets these requirements because of your poor credit score or financial situation, consider building your credit before you borrow from a lender. Installment loans can help build your credit if you pay on time on a consistent basis and the lender reports your activity to one or more credit bureaus. Whatever your unexpected expense, an installment loan can be a quick fix, even if you don't have a great credit score.
Learn more about installment loans below, what options are available to those with less-than-stellar credit, and how you can safely apply for a bad credit loan. The defining characteristic of installment loans that they are repaid over time rather than all at once helps make them more affordable than payday loans. With an installment loan, you can take out a fixed amount of money at once and repay it over time through fixed payments. Improving your payment history should be greater than any decrease in your credit score caused by a thorough consultation about your credit history, a temporary drop in the average length of your credit, or the impact on your credit mix when you pay off the loan.