In America, 60% of people cannot cover a $1,000 emergency bill and must use their credit cards to meet their bills. But this isn’t the best option. Credit card debt is expensive due to its varying interest rates. However, credit cards are still the only option for some people with bad credit who get turned down by traditional loan lenders.
Getting a loan at the best of times can be difficult, but getting an emergency loan with bad credit can seem impossible. But there’s still a way to get approved for a loan and access the cash you need. This article discusses how to get an emergency loan with bad credit.
What Are The Options For Emergency Loans With Bad Credit?
You might have been made to believe that you don’t qualify for fast cash in an emergency because your credit score is bad. Some lenders may offer you the money, but warn that getting a loan with bad credit may come at hefty unaffordable interest rates. But, there’s still a way to get an emergency loan with bad credit on reasonable terms. But, first, let’s examine what affects your credit score, so that you avoid aggravating the problem and get yourself out of the financial rut.
What Hurts Your Credit Score?
There are several reasons many people have bad credit. The most common bad credit score traps are:
1. Your Monthly Bills
When you don’t keep track of your finances, you may not have enough money at the end of the month to pay your bills. One study in 2018 found 35% of people missed paying a bill because they forgot about it. In 2017, more than $23 billion in credit card debt was more than 30 days overdue. Currently, many people pay their bills automatically. Yet, 65% of people didn’t know how much they spent the last month.
Your failure to remember your financial obligations may result in failure to keep up with your bills and forgetting them entirely. Although some people hope the company will eventually give up and stop sending bills, this information does not disappear. It goes into your credit report and affects your credit score. Unfortunately, without a proper credit score, you’ll likely be turned away when applying for a loan. But you may still find a lender willing to give you an emergency loan with your bad credit.
2. Opening or Closing Credit Cards
Each time you apply for a new credit card or loan, the company makes a hard credit inquiry to ensure you can afford a new card. But these hard inquiries hurt your credit score and cause it to fall. So, avoid the hard inquiries and do soft inquiries instead.
Closing old credit cards can reduce your debt-to-credit ratio, which is the difference between how much you owe on the credit card and how much you can spend. But, having a credit card with a zero balance can improve your credit rating, especially one that you have had for years because it establishes a more extended credit history. So, instead of closing your old cards, keep them, to improve your credit rating.
3. Making Minimum Payments
Even if you pay your bills on time, a high balance on your credit cards can lower your credit score and make it difficult to access an emergency loan with bad credit. Making minimum payments also affects your debt-to-credit ratio. Your rating can be affected when you have used more than 30% of this ratio. Your total credit and debt across all your credit cards and loans determine this ratio. This means the ratio is balanced between all cards if you have a high balance on one card but zero balance on others.
The Consequences of Bad Credit
There are several consequences to having bad credit. First, since your credit score helps determine your interest rates on credit cards and loans, you may be asked to pay higher interest because you’re perceived as a high-risk client. Second, you may have problems renting an apartment. Landlords check your credit rating and may refuse to lease if you have a low credit score, or you may have to pay more for your security deposit if they accept you.
Third, utility companies check your credit score during the application process. Cell phone companies may deny a contract. Some jobs in the finance industry turn you down if you have a history of bankruptcy or outstanding bills. Fourth, insurance premiums can be higher, and you will likely pay more interest for a car loan.
If you’re not already experiencing these consequences, take precautions when applying for an emergency loan with bad credit to keep yourself from aggravating your situation.
Where to Get Emergency Loans With Bad Credit
If you’re still wondering how to get an emergency loan with bad credit, you have a few options. They include:
A Payday Loan
Right off the bat, while this is a financing option, it is not recommended, especially if your credit is already bad. These loan types are predatory, with their interest rates often exceeding 400% or higher. In addition, you’ll be asked to pay off the loan in full within a couple of weeks, which you likely will not be able to afford, resulting in a need to borrow again to repay the existing loan. Many people are easily caught in a cycle of debt this way. So, while this is a financing option, don’t take it up.
Credit Card Loan
There are credit cards that can offer a cash advance. But, like a payday loan, they, too, can be pretty expensive. The interest charge begins immediately when you take out the cash and is usually higher than when you use the card to buy something. Credit card terms can also be confusing, and it’s easy to make costly mistakes that could result in you paying more than you owe. Avoid this loan option for a person seeking an emergency loan with bad credit.
A Signature or Personal Installment Loan
The best alternative to a payday loan or taking money on your credit card when you’re wondering how to get an emergency loan with bad credit is an installment loan. Installment loans give you a longer term to pay the loan and often offer more significant loan amounts. As long as you prove that you’re gainfully employed, you do not need collateral to apply for one. Your consent and signature are enough.
Unlike installment loans, title loans require you to guarantee the loan with the title of a vehicle or property. If you’re unable to pay the loan, the lender can get their money through the sale of your property, which can be risky for you if you run into difficulties paying your loan. Also, you cannot apply for this loan type if you do not have an asset.
The best credit option, therefore, for a person wondering how to get an emergency loan with bad credit is to take out a personal loan. It is affordable and non-predatory regarding payment terms, and you get a more significant amount than you would with other loan types dubbed as fast or emergency loans.
Get A Minute Loan Center Personal Loan With Bad Credit
Are you in a tight spot financially and need an emergency loan with bad credit? Minute Loan Center has an easy application process for its loans, which are processed just as quickly as regular emergency loans. You can make the application online or physically at our stores, which are spread across various states. Our in-house creditors will process your application quickly and receive your money immediately after approval. Contact us to apply for a loan today and get the cash you need to attend to your financial emergency today.
Kevin brings over 15 years of experience in marketing, with a specialized expertise in growing online businesses. As the Director of Marketing at a leading FINtech company, he employs innovative strategies to enhance brand visibility and customer engagement. Kevin’s passion lies at the intersection of technology and finance, where he pioneers solutions that not only meet but exceed consumer expectations. His commitment to leveraging his expertise ensures impactful results and the building of lasting relationships in the digital landscape.
