The Terms And Agreements Of Unsecured Credit Cards For Bad Credit

Bad credit doesn’t mean you are completely shut off from receiving funding from every lender. Unsecured credit card bad credit lenders will offer you the money you need in exchange for high interest rates, fees, and late payment penalties. When you are shopping around for an unsecured credit card, be prepared to face a few bumps in the road.

  •     Your credit score. If you have a decent credit score, it won’t be a problem to gain approval for the card. However, your credit score will determine your interest rate. The lower the score, the higher the interest rate. Be careful when you shop around and look for lenders that don’t require a credit check if you know your score is bad.
  •     Fees. There are some lenders that will charge yearly or annual fees on the credit card. Wells Fargo is one lender that is known for offering unsecured credit cards and then penalizing you with high interest rates and fees. Be weary of certain lenders like this that like to profit off your misfortunes.
  •     Credit limit. Sure you can get approval for a credit card, but how large is your limit? Some lenders will not allow you to have large limits on the account because they just don’t want to take a risk by giving you access to a lot of free cash.

If you know you struggle with credit cards, do not open one. People that are stuck in a debt cycle will only hurt themselves by opening up another credit card to use for their spending sprees. Opt for personal loans with bad credit or credit cards for people with bad credit instead as you have a structured payment plan and you know when the loan will be paid off and you will be debt free. You may pay more money towards interest, but it’s better than continuing the debt cycle.

Do smaller personal loans require credit checks?

Depending upon the lender you have chosen to work with, some small personal loans do not require any type of credit check. Lenders instead will ask for the following information:
  •     A recent bank statement
  •     Your last tax return
  •     Proof of income
  •     Your last 2 pay stubs
The lender will then contact your employer to make sure that you aren’t lying and that you really do work there and make that amount. Individuals with bad credit are risky borrowers so lenders are going to punish you with high interest rates and other fees. Since they are not asking for a credit check, they are going to offer lower loan terms. This is the only way to make sure they will make back the money they lend you because they aren’t going to lend you a large amount of money.

If you repay the loan in a timely manner and you demonstrate strong credit worthiness, they will offer you additional loans in the future with larger loan terms. One loan option they may be able to offer you is mortgage loans bad credit options that will help you get into a nice home at an affordable rate.

Some people have really bad credit and they cannot obtain small personal loans. The next option you have is to apply for payday advances to meet emergency needs. Payday loans are given to anyone that has a job. You are borrowing from your future paycheck, so you need to be really careful about how much money you borrow. The interest rate is pretty high on a payday loan and you can end up with an APR of 430%. The reason for the high interest rate is the loan term. A payday loan has a 7-14 day loan term. You are required to repay the money on your next payday or you will face the high interest rates. Payday loans can be used for an emergency, but they can put you on the path to financial ruin in a hurry so be careful.

Do you qualify for today’s best mortgage rates?

Equity The amount of equity you currently have your is a large factor when determining if you qualify for the best mortgage rates available. The recent sales in your area determine the current market value of your home. Within the past 3 months what have the houses surrounding your home sold for? Home prices are being driven down in most areas by all the recent foreclosures. Lenders judge home value based on what they could sell your home for if they ended up having to foreclose. (Measures to properly value your home are used to protect the banks in case they end up with your home. But in reality, they do not want that to happen.)

To qualify for the current market’s best rates the amount of down payment in a home purchase or the amount existing equity helps determine whether this is available to you.

Income A very important factor in any loan transaction and one of the first questions the bank asks themselves. “Can this person afford this payment?” The general lending guidelines are if your loan amount is under $417,000 your total monthly debt payments (credit cards, mortgages, auto loans, taxes and insurance) need to be about half of your gross income if you are a salaried employee and about half your adjusted gross income if you are self employed. If your loan is above $417,000 you will need your debts to be at or below 45% of your income.

Assets When determining if a borrower has the capacity to be able to repay a mortgage loan on time liquid assets are taken into account. Most banks like to see that anyone they lend to has a between 2 and 6 months of mortgage payments saved up somewhere in accounts they have access to. This provides a buffer for stability in case someone is between jobs or an unforeseen bill comes up one month. Lenders like to know that someone has enough money saved to be able to overcome unforeseeable events such as paying for car repairs in the event of an accident. Without any assets saved up a person could be forced to reallocate money that typically is used for their mortgage payment for something else.

Credit Score Assuming all your other qualifying factors are in line 720 seems to be the magic number to qualify for the lowest mortgage rates available. Most consumer credit reports are only from one credit bureau but this is not how lenders gauge your credit. They look at the three major bureaus (Experian, Equifax, and Transunion). Some creditors only report to one bureau so the scores at each are usually different. As a standard practice all lenders look at all three scores and take your middle score. If you have an 810 at one bureau, 725 at another, and a 650 at the third you will qualify your rate off the 725 score. Your credit score is a way to determine your willingness and ability to repay your debts. If you pay you will be rewarded with better financing options.

Now that you know what will be looked at when you apply for a loan and if you meet all this criteria you can begin your search to find the best mortgage companies that deliver what they promise. Your home financing is one of the largest investments you will make in your entire life. If you have proven that you will honor your commitments you should get a great deal!