About 1/3 of Americans have a credit score of 601 or lower — meaning that bad credit scores are much more common than you might think.
A poor credit score can make it difficult for you to get approved for a credit card, impact your employment opportunities, and of course, make getting approved for a loan a serious challenge.
Especially if an unexpected expense comes up, or if there’s an opportunity that could help you to get your finances back in order, we know that you’re concerned about how you’ll come up with the money you need.
The good news?
No matter what you’ve been told in the past, you may still qualify for a certain type of loan.
Guaranteed approval loans, also referred to as bad credit loans, could be the answer you’ve been looking for.
Read on to learn more about guaranteed loans for bad credit.
What Are Guaranteed Approval Loans?
While we strongly suggest doing everything you can to repair your credit score as soon as possible, when you just can’t wait for cash, apply for guaranteed loans for bad credit.
But what are these loans?
The “guaranteed” aspect of the loan refers to the application and approval process itself.
While it’s important to understand that yes, these loans do still carry minimum financial requirements for borrowers, these qualifications are much less stringent than with other kinds of loans.
When you apply for other kinds of loans, your credit history and current credit score are often the first things that lenders look at. But with guaranteed bad credit loans, the lender instead looks at your current source of income.
This means that lenders gauge your ability to repay the loan based on how much money you’re currently making, not the financial mistakes you’ve made in the past.
Often, you can get guaranteed loan approval without the lender even needing to run a credit check on you in the first place. This means that not only will you get the money you need, but also that you’ll get it much faster than you might expect.
Usually, you’ll just need to provide proof of current income, a bank account number, past bank statement, and proof of residency to be approved.
What to Watch out For
When you’re applying for guaranteed approval loans, there are a few potential downsides that you need to be aware of.
The biggest thing to watch out for is an unusually high-interest rate.
Because lenders haven’t run a credit check and know that you’re likely not in the best financial state, they often charge astronomically high-interest rates in order to protect themselves in case you can’t pay the loan back.
This means that, if you’re not careful, the loan could end up costing you much more than it’s worth.
In order to avoid this financial trap, make sure that you can truly afford the interest rate over the life of the loan. A good rule of thumb here is to take out the absolute minimum amount of money you need to get by.
You may also be able to negotiate interest rates with lenders if you’ve received multiple offers for no credit check loans.
The positive here is that the amount of your monthly installment payment will always be the same regardless of the interest rate. This means creating a monthly budget is a bit easier.
Just as with potentially high-interest rates, you should also speak to lenders about the kinds of fees that you’ll need to pay on your loan. Many lenders charge you an origination fee, an application fee, and even hefty prepayment penalties.
Of course, you should also research the lender themselves.
Check with the Better Business Bureau, past customers, and verify a lender’s credentials to avoid being taken for a ride.
Common Reasons to Take out Guaranteed Loans
Finally, make sure that you’re taking out guaranteed approval loans for legitimate financial reasons.
While yes, we’d all love to be able to treat ourselves to aonce-in-a-lifetime vacation or a designer wardrobe, these things are simply not worth taking on more debt for.
So, what are some of the most common reasons for taking out guaranteed loans?
Many people use these loans to help them remodel a home before they put it on the market. They also use this cash to pay their medical bills, consolidate their debt, or even to buy a car. In some cases, personal loans can even be used to help you to buy a home.
They’re also a popular way for entrepreneurs to get their businesses off the ground.
You should avoid using the money from a personal loan to finance your wedding, buy holiday gifts for others, or even investing in the stock market.
Are Guaranteed Approval Loans Right for You?
Guaranteed approval loans may not be right for everyone, but especially if you have bad credit and are facing an emergency situation, they can be a real lifesaver.
Want to find a part-time job or a gig that can pad your income and allow you to fix your finances? Curious about the best ways to start planning for your retirement?
Feel like guaranteed approval loans aren’t actually the right lending option for you, but want to learn more about other ways to borrow money?
Our blog is here to help you with all that and more.
Whether your financial goal is to save up your cash or make a smart investment, keep checking back in with us for all the money tips and tricks you need to live comfortably.