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Does having bad credit mean I’m being punished for bad financial habits?
It’s important to remember that having bad credit doesn’t always mean that someone was irresponsible. There are a myriad of life circumstances that can impact finances and set you back – such as unexpected medical bills, loss of employment, a natural disaster, etc. Having a low credit score can also mean that you’re simply just starting out, and have yet to build any credit. Bottom line: Many people find themselves having a low credit score through no fault of their own.
But regardless of the events that lead to it, there are some general side effects of having bad credit.
Higher interest rates
A lower credit rating could mean a higher risk for default. Lenders may compensate by setting interest rates higher to protect their investment. So, borrowing a large amount could mean paying a large amount of interest over time.
Difficulty getting approved altogether
If you have an unusually low credit score, you may see few lenders willing to take a chance on approving you for a loan or credit card.This is a realistic situation that many with no credit find themselves in – such as a student, applying for a loan. In this case, getting a cosigner is usually the route to take.
Difficulty renting a place of residence or getting a phone contract
Even if you’re trying to rent a place of residence or sign a phone contract – neither of which would call for a loan – having bad credit could still potentially slow things down. This comes as a surprise to some because they think agreeing to pay the bills in cash should nullify the credit risk. But landlords and phone companies could in fact check your credit before agreeing to do business with you.
Paying more security deposits
Utility companies – similar to landlords and phone providers – can check your credit as well. You may be asked to pay a security deposit, or a higher security deposit, depending on your credit score and the company’s policy. Since you wouldn’t be paying interest on utilities, the one-time fee upfront works the same as insurance would for the provider.
Choosing a bad credit lender
Despite the difficulties, having a low credit score doesn’t mean getting a loan is impossible. What it does mean is you may need to utilize a little more strategy in selecting a lender. You can be approved through a short-term lender, online lender, bank, or credit union. You have plenty of options to choose from, and convenient ways of searching for them. But if you decide to do a little more digging on your own, it helps to know where to start.
Competitive interest rates are only one piece of the puzzle. Your goal is also to identify supportive resources that help you chip away at debt and ultimately get back to building your credit score. Here are a few things to think about when considering your options:
Types of bad credit personal loans
Installment loans: These loans don’t have any collateral attached, but do require you to pay through amortization, which are equal monthly installments over the predetermined loan term.
Payday Loans: Also don’t require collateral, but you must repay by your next payday. For this reason, they are usually short-term loans with high APR.
Cash advances: Similar to payday loans. Cash advance lenders most likely won’t check your credit, but these are most useful if you have a credit card or steady income. Not available in all states.
Bank Agreements: Per your bank’s policy, they may approve you for a short-term loan or minimal overdraft agreement. This is of course dependent on your banking history and ability to keep your account open.
|What to look for in a lender||Questions to ask|
Do they have a full online/mobile service?
Is there a comprehensive pre-approval process?
Are there service agents ready to speak with me whenever needed?
Are they licensed in all 50 states, and where are the branch locations?
What’s the minimum credit score to receive service?
How is underwriting handled, and will they consider alternative credit data?
Are there a variety of secured and co-signed loans options?
Do they offer zero and low down payment options?
Are they willing to waive lender fees?
3 life events that may call for bad credit loans
Consider some practical reasons why getting a bad credit loan could be a better choice than some of the more common ways of dealing with financial problems.
Building your Credit Post-Bankruptcy
Filing for bankruptcy is a decision that shouldn’t be taken lightly. While it can help to stem the tide of debt you find yourself in, it can certainly cause your credit score to take a major hit. However, many have bounced back from bankruptcy. The key is knowing when to take the first step.
Bankruptcy in the US
Understanding what’s gone and what’s left over
Bankruptcy has a tendency to feel like the end, not a beginning. It’s natural to have doubts when you’re having financial problems, and the hardest part can be accepting the realities and feeling confident about the future. Or, you might be looking at things from the other side – relieved that so much debt has been lifted.
The truth is, filing for bankruptcy is more like taking a life raft than an escape hatch. There are still some debts that you’re responsible for repaying, even after filing. It’s important to know which debts bankruptcy can touch, and which debts it can’t.
|Bankruptcy Eliminates||Bankruptcy Doesn’t Eliminate|
Chart your course
Bankruptcy doesn’t stay on your credit report forever. Once it’s discharged, you essentially have a clean slate to rebuild your credit score. However, the costs involved with filing shouldn’t be taken lightly either. Putting together a step-by-step action plan following bankruptcy is highly recommended, if only to avoid trying to do too much too quickly.
Make a budget – Track your expenses for three months and create a budget around your monthly income. When you can, establish an emergency fund.
Pay all bills on time – Even after filing for bankruptcy, your payment history is being tracked.
Beware of scams – Stay away from anyone offering to repair your credit post-bankruptcy for a fee. Only you can build your credit, and it’s free.
Your eligibility for a loan post-bankruptcy will most likely be scrutinized. Your employment status, income, and ability to manage repayments means everything when it comes to being approved. Your assets could also be a factor, as you’ll most likely be required to provide collateral. If you had to file for bankruptcy due to unemployment, you could start with a manageable cash advance or some other short-term agreement. The key is to keep chipping away at your debt until you can build a good foundation in its place. Keep in mind that bankruptcy, while initially damaging to your credit score, doesn’t have to undermine your financial future.
Common suggestion: Get a secured credit card
Whether you file for Chapter 7 or Chapter 13 bankruptcy will determine the amount of time it will appear on your credit score (7-10 years). Some financial advisers suggest opening a secured credit card account will help you build credit quickly after the bankruptcy is lifted from your report. That’s true, but any interest rates and annual fees attached could also put you at risk of falling into more debt.
Why a bad credit loan could be a better choice
Most credit unions and banks want to see at least 12-24 months of solid payment history before approving you for any kind of secured method of building credit. Getting a bad credit loan can help you establish some consistent payment history without having to worry about annual fees plus interest. Be prepared for lenders to see you as high-risk. But if you can find an affordable loan and repay it, you can begin to get your credit score back on solid ground.
Funding for Disabled Veterans in need of Home Modifications
The U.S. Department of Veterans Affairs (VA) provides the most comprehensive economic and health-related assistance for vets and their families. However, there are some limitations. According to the U.S. Census Bureau, a total of 3.8 million veterans had a service-connected disability rating as of 2014.
Service-connected disabilities are wide-ranging, but consist of a disease or injury obtained during active military service. While not every individual faces the same problems after service, the top three economic challenges tend to be unemployment, poverty, and homelessness. Veterans with service-connected disabilities, who are in need of specific home modifications and medical treatment are among the most at risk of experiencing some kind of debt that can lead to bad credit.
Government assistance for veterans
There are various resources for veterans with debt. One example is called the VA Medical Care Hardship Program. In addition to receiving help with some copayments related to medical treatment, veterans can also benefit from existing debt waivers. While programs like these largely make approvals based on service rather than credit history, there are still some strict eligibility requirements attached – i.e. you need to submit a letter for review, outlining your financial hardship. And this mostly applies only if your gross household income has decreased.
For service members and veterans who are living with a family member, there are three VA housing grants that allow for home modifications to the family member’s home:
- Specialty Adapted Housing Grant
- Special Housing Adaptation Grant
- Temporary Residence Assistance Grant
However, like the larger health benefits programs, the scope of eligibility can be narrow. Below are the specific details of each grant.
Blindness in both eyes having only light perception, plus loss of or loss of use of one leg, OR
The loss of or loss of use of one leg together with the loss of or loss of use of one arm, OR
|Who owns the home?||An eligible individual|
|Grants you can use||Maximum of 3 grants, up to the maximum dollar amount allowable|
|Who owns the home?||An eligible individual or family member|
|Grants you can use||Maximum of 3 grants, up to the maximum dollar amount allowable|
|Eligibility||Dependent on eligibility for SAH and SHA|
|Who owns the home?||An eligible individual’s family member|
|Grants you can use||Maximum of 1 grant|
What parts of the house qualify for renovations?
- Bathrooms, kitchens, and bedrooms
- Covered porches, ramps, and walkways
- Garages, carports, and passageways
- Doors, windows, and flooring materials
- Security items
- Concrete or asphalt walkways
- Sliding doors, handrails, and grab bars
Why a bad credit loan could be a better choice
Despite the idea that VA loans aren’t as stringent when it comes to credit scores, most lenders would actually like to see a score of 620 or higher for approval. With a bad credit personal loan, veterans with service-connected disabilities, debt, and credit scores below 620 won’t have to put all their eggs in one basket. It can also widen some of the eligibility lanes and provide some financial relief more quickly.
Dealing with Debt after Divorce
Divorcing your spouse can be an overlooked source of long-term financial strain. Some of the financial decisions made during marriage aren’t so easily navigated once you’ve decided to part ways. While a divorce doesn’t show up on your credit report, your score could suffer some residual effects depending on any debt incurred during the marriage, as well as attorney fees and other costs.
Apart but not alone
Divorce, like bad credit, can cause feelings of loneliness and anxiety. Much of it stems from regret, especially for those who weren’t financially independent during the marriage. The first thing you should know is that you’re definitely not alone. The process isn’t easy. Neither is finding a way to both educate yourself about your finances and re-establishing some healthy financial habits. It’s also important to note that while you might be divorced from your former spouse, keeping your financial partnership intact is ideal when tackling some combined debt.
You’re not alone.
Are worried about their finances after getting divorced
Say that divorce put them in financial ruin
Regret not being more financially independent in the marriage
What combining debt means during marriage and after divorce
It’s considered a myth that any debt you incur individually will automatically merge with your spouse’s debt after marriage – making both of you liable for all of it. It’s not so much a myth, but rather an overly generalized view of what can actually happen. If you or your spouse incur any debt during the marriage, joint liability will ultimately depend on where you live.
Most states will follow one of two rules when looking at debt within marriage:
Community Property – where income and most debts incurred by one spouse during marriage are owned by “the community” – both spouses.
Common Law – where most debts incurred by one spouse during marriage are owned by that spouse alone. (Exceptions to this rule are any debts that fall under “family necessity” – i.e food, shelter, medical expenses, and school tuition.)
Community property map
This is important, because creditors in community property states can seize a couple’s assets to pay off debts, even if the debt was incurred by one spouse. While the rules vary by state, most will follow common law rather than community property. But a lot depends on how you and your spouse choose to handle the family finances.
cost will come down to whether the divorce is uncontested or contested. An uncontested divorce means both parties agree on the details of the separation, and can generally take care of everything for a few hundred dollars. A contested divorce means you can’t agree on all the issues to adequately move forward, and a neutral third party needs to be involved. Divorcing couples commonly hire a mediator if large assets or children are in the picture. Mediators tend to charge an average of $100 to $150 per hour, depending on the complexities of the situation.
Issues negotiated through mediation include:
- Child custody/support
Mediation is certainly cheaper than litigation. And keeping your divorce out of the courts can spare all parties involved some emotional and mental stress. The bottom line is understanding all costs involved with divorce can help to shape your thinking about financing and the effects on your credit.
Common suggestion: Sign a prenuptial or postnuptial agreement
If a couple decides to divorce, the related costs are unavoidable. Though it’s difficult to really prepare because you can’t predict the future – and going into marriage with your mind on divorce could be a downer. But many do choose to go the prenup route to fend off any potentially ugly litigation. Postnuptial agreements are no different, other than the agreement is made after the couple is married. Couples tend to consider a postnup if divorce is on the horizon and they want to agree to keep costs as low as possible before proceeding.
Why a bad credit loan could be a better choice
Though a nuptial agreement can help with some divorce-related costs, it’s no guarantee that you won’t incur debt as a result of the divorce. It also has no bearing on any unpaid debt that’s incurred during the marriage. Your credit score could already be in the red by the time of your divorce, and a bad credit loan can help you to navigate the beginning stages of a challenging season.
Protecting your credit score after laying fresh ground
Building credit and protecting your credit score aren’t always synonymous, but they are related. Once you’ve regained some financial footing via a bad credit loan (and you will), you can then continue to practice good habits and set up protections around your credit score. Three quick tips:
Make automated payments: Start with setting up automatic payments for your bills through your bank. This will relieve the burden of having to remember due dates. And it will get you into a consistent a rhythm of repayment, which is music to a creditor’s ears.
Cash in, cash out: Be strategic with your credit cards and pay for more using cash. Your budget shouldn’t allow you to spend beyond what you earn. Using cash will help you keep track.
Keep an eye on your accounts: Even when you’re not overly active, continue to check your FICO score and credit card accounts regularly. This will help you maintain an ownership mentality and keep annual fees from sneaking up on you.
It’s about Beginning Again
Starting over financially most likely means starting over personally in some areas as well, and that’s nothing to be ashamed of. A lack of knowledge, adequate resources, or access to funds to pay off debt can have a swift impact on your credit score. But remember, bad credit doesn’t have to be final. You still have options toward building a functional financial life; and a bad credit loan could be a viable one.
For a Fee Credit Counseling Consultation visit
or Call Below: 877-766-2465, Speak with any expert counselor
April 30, 2017
Dear reader, of late American Debt Enders has received a number of inquiries
from consumers looking to obtain a Debt Consolidation Loan to relieve their personal cash flow problem.
As a result we have responded to meet this need. We have set up a website which contains over forty lenders, all of whom have been
peer reviewed. That means that you the consumer have shared your experiences in dealing with each of them.
This resource is absolutely free to use. I will give you the link here:
. Before you click on it, here is some guidance to help you.
After you get to the site, look in the left hand column
and enter your FICO score, or credit score. This will present you with a list of lenders who will lend to you
at your credit score. Now, you can check the reviews on each one, and look to see who might be the best
to approach for the amount of money you want, and who will provide you with the best interest rate.
You can then apply right on the site, without leaving your home, to see who will provide you with
the best terms. Please do not get crazy and think of this as free money. Using this type of loan to resolve
a debt issue can be risky a blessing or a curse. We want to keep things on the blessing side. Make absolutely
certain that your new monthly payment will be affordable to you, and is at a lower interest rate than the interest
rate of the money you are paying back. Make sure you do pay back the money you owe, in other words this is
not money from a windfall, although it can feel that way.
If you have gone this route in the past and it has not worked out, then you need to call American Debt Enders
and we will help you get back on the right track.
Best of luck to you.
September 02, 2016
Their seems to be a great deal of misinformation on this topic. The question being do banks have insurance to cover themselves against loss in case of a payment default by a consumer, and is
debt dispute valid way of handling a debt crises? Perhaps the best way to approach this question in a credible manner, one that takes the answer beyond the realm of opinion, is to look at actual court cases and study the legal track record , if one exists, on this topic. So, to keep this outside of my opinion, that is exactly the approach that was taken when researching the answer to this question. Here is the actual question that we are attempting to answer. We know that a bank cannot carry defaulted debts on its books forever. The reason being that defaulted debts, or debts where the odds are negligible that a bank would ever recover money loaned on a credit card or other unsecured debt, would badly skew the picture on the health of the bank or lending institution. So, banks are bound by a simple rule. When a debt reaches a default age of 180 days, the bank must remove it from its books as an asset and charge it off.
Here is the Documentation:
Fact #1. In June 2000, the U.S. Comptroller of the Currency issued an Order on its Web Page to All Banks. (See 8 Pages) So, here we have the first proof.
As an aside, I thought I would throw in this piece of legal information from Appellate court cases:
. Their are 2 Pages of Appellate Court Cases proving that Banks/Lenders cannot Foreclose on Any Debt Without First Presenting the Original Promise To Pay/Credit Card Agreement. A Copy Of An Original Is Not The Original Promise To Pay/Credit Card Agreement As Required By Law.
Here is our first piece of Documentation on the actual Default Insurance. It is found in a case called Jenkins Vs Heinz, 25 f 3rd, 536, 1994. This is an Appellate Division ruling overturning a lower court ruling in which the bank was holder of a car loan after a repossession and was seeking to recover 4,137.00 from the defendant which they said was money it had to spend to maintain vehicle insurance that the defendant had allowed to lapse. The insurance they were looking to be reimbursed for was not car liability insurance, etc, but rather insurance against a payment default which is exactly what happened. Note: Insurance against a payment default. I realize that a car is a secured debt, however, the principle is the same.
For easy reading I have chosen to end this article here. However, if you would like to know more
about our debt dispute program, please do feel free to call at 877-766-2465.
July 31, 2016
So why would a debt relief company help consumers find a good source of personal loans?
While American Debt Enders does not offer loans directly, even we acknowledge that their are times
when it is more appropriate for a consumer to alleviate debt through a personal loan, rather than a
debt relief program. While we have always acknowledged everyone is different, and everyone’s debt situation is different 14 years of financial counseling has taught me that it is foolish to be close minded
in life and that includes debt solutions, which is why American Debt Enders offers so many solutions.
For example, while a personal debt management program, non profit, is an excellent way to relieve
high interest credit card debt, their are actually times when it is not the appropriate solution. If the credit card debt is to low, for example four thousand dollars, but has high interest, than it may well be more appropriate to take a personal loan at a reasonable rate of interest to pay off the high interest rate credit
card debt and make one lower payment a at lower interest rate to pay off the credit card debt and keep the credit line from the credit cards open for emergencies only. If you go this route, than you must make sure that you remain disciplined enough to stick to the plan and do not abuse the fact that you have extra credit available. That would make the situation much worse and start you on a very negative trend. In other words, just because their is money available, does not mean you need to spend it.
I have counseled with many consumers who have done this and placed themselves in a much more negative situation. So, without further a due, I am going to share with you a link to a financial loan site
that has on it over 30 different loan sources, all rated and reviewed and actually states what is needed toqualify for a personal loan. You will be able to shop on this site by reading the review and checking to see what range your credit score needs to be to be accepted. The site also lists how much you can borrow and what the rate would be depending on your credit score and what the monthly payment
terms would be on your new loan. You can do all this from the privacy and convenience of your own home. What a world we live in!
Here is the link: Find Personal Loans. Just remember shop carefully. If you are in a more serious debt situation, and you need help with Payday loans, credit cards in collection, Private student loans, Federal student loans, or any type of unsecured debt we can help you, so please do not hesitate to call us.
May 13, 2016
This is part one of a two part article explaining exactly what debt invalidation is.
The above question is a popular inquiry on Google and all other search engines. So time to really delve into it. Their may be some variations on each companies approach, but overall this article will provide you with a thorough understanding about this process which is becoming more popular. First, what it is not. It is not illegal, it is not a scam, it is not immoral, it is not Debt Settlement, or Bankruptcy. Secondly, the company you hire to represent you and your interest does not have to be a law firm, although it is good to have an Attorney involved in the process, or at least on standby, should one become necessary. We will cover this in more detail later on. By the way, American Debt Enders is not a law firm and does not give legal advise. For all the trouble makers on the internet, providing information and education about law, is not the practice of law.
Despite what most consumers believe, one does not have to have a BAR card to be an authorized representative for another person. Contrary to popular belief, there are no laws against appointing a personal authorized representative to present your interests in a claim or dispute. It would be against all American equitable principals to create laws that would prevent a free man or woman from appointing an authorized representative, or agent, to act on their behalf. Other terms for a personal authorized representative may include, power of attorney, trustee, executor and agent to name a few. Sorry lawyers.
Next Item. Why Dispute A Debt? A debt should be disputed to make a debt collector prove they have the right to collect on a particular alleged debt. Their is absolutely nothing illegal or immoral about doing this.
It is the law that makes it possible. For clarification, I do not and would never recommend using this method to avoid a debt you know is valid and that you really owe and can afford to pay.
When a debt collector sends a notice of a debt owed to a consumer they are making a claim against that consumer. Note:(this article is based on researching the debt dispute program as laid out by Infinity Consumer Services, which contains some unique elements.) When you the consumer dispute the debt you are making a counterclaim, the claim and counterclaim create a commercial record of both. right at the outset of the dispute. The following information must appear on all notices for collection sent to a consumer. “…unless you dispute this debt within 30 days of receipt of this letter, we’ll assume the debt is valid.” Please notice the word Assume. If all debts were valid without assumption than their would be no need for any laws governing the rules for dispute.
Please do take the time to read part two of this a article, and if you are interested in enrolling in this powerful debt relief program, feel free to call. 877-766-2465.
This content was originally published here.