If you have bad credit and need fast cash, you may not realize you may still have loans you qualify for. A bad credit loan could be an option if you’ve been turned down by your bank or credit union and borrowing from relatives or friends isn’t an option.
There are several types of bad credit loans to choose from. They often come with steep interest rates that could cost you several hundred or thousands of dollars more over the life of the loan. So, it’s worthwhile to exhaust all your options and explore other alternatives before applying for a bad credit loan. However, if you are in a pinch, a bad credit loan could be what you need.
What is a bad credit loan?
Bad credit loans are designed for consumers with low credit scores that can’t get approved for funding elsewhere. You can expect higher interest rates and fees with these loans as the risk of default is higher.
The FICO scoring model, which 90 percent of lenders and creditors use to make a lending decision, ranges from 300 to 850. Lenders who offer bad credit loans generally target consumers within these FICO score ranges:
- Poor credit: 300 to 579
- Fair credit: 580 to 669