A credit recovery process that could usually take a couple of years can be reduced by means of these loans to a period of time between six months and a year. But, do you know what bad credit signature loans are and how to use them to recover your credit score and rebuild your credit history?
The Concept Of Signature Loan
You may wonder what a signature loan is. Basically, it is a synonym of unsecured loan. This name was used mainly because since there is no collateral required for approval the sole signature of the borrower is enough for the lender to provide the funds that the borrower is requiring. This of course does not necessarily mean that there are no other requirements like a credit verification or proof of income.
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However, when it comes to this loan type, it is possible to find loans that do not require credit checks (income verification is a must on all loan types). These are awarded regardless of the credit score and history of the applicant which makes them a great financial tool for those with bad credit or no credit at all as it helps build a healthy credit history.
Advantages of Bad Credit Signature Loans
The loan amounts you can obtain vary but you can obtain loans for up to $20,000 with the proper qualification. Of course whether you can obtain these high amounts will depend on how bad your credit score is but most importantly how high your income is and if you have sufficient proof of it. Income is very important when it comes to signature loans and if you are applying for the bad credit type, it is even more important.
Also, the repayment programs on these loans are very flexible. You can easily obtain approval for up to 10 years without collateral which is amazing given that the loans are for bad credit applicants This is due to the fact that there is such high struggle between lenders to keep and augment the number of clients that they are forced to offer more advantageous terms.
The Drawback
The main drawback on the loans is that the interest rate charged for the money borrowed is rather high. The reason is obvious too: the risk of default is greater when the applicant has bad credit and thus, in order to compensate for the possible loses, the lender has to charge higher rates to all the applicants.
Though high interests almost always apply to these loans, it is still possible to make them drop a bit if you provide a co-signer with a good credit score. Co-signing is not necessary for approval but if you want to get more advantageous terms, by co-signing you will be able to let the lender offer you a lower rate and maybe other better loan conditions because the co-signer's credit report will compensate for yours.
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