Question 1

How can I fix my credit score?

Accepted Answer

Your credit score is a number generated by analysis of various aspects of your credit history. The two primary consumer credit scoring models are FICO and VantageScore. While there are some key differences between FICO and VantageScore, they both employ a scoring scale of 300 to 850.

With the FICO score, payment history makes up the lion's share of the score – 35%. So if you're wondering how to build credit, the best thing you can do is to pay off credit card debt in a timely manner. Staying on top of your payments and not missing a single one should be a top priority. A late payment can cost you in different ways. Late payments often result in late fees, but more significantly for the long term, they can depress your credit score, which will make it more difficult for you to qualify for the best loan interest rates down the road.

The total amount of money you owe makes up about 30% of your consumer credit score, so keeping a low debt-to-income (DTI) ratio can help increase your score. To calculate your DTI, divide your monthly debt payments by your gross monthly income and multiply the result by 100. It's generally recommended that your DTI ratio shouldn't exceed 30%.

You might also be able to boost your credit score by having the regular payments you make on your monthly bills reported to the credit bureaus. For instance, you can build credit with rent repayments or enroll in programs that report utility payments to the credit reporting agencies. The more on-time payments that are reported, the better for your credit history and credit score.

Another way to boost your credit score is to read your credit report and check for inaccuracies. If you spot erroneous charges or other mistakes, you can dispute them with the credit bureau and attempt to remove those items from your credit history . The bureaus have up to 45 days to review and investigate your dispute.

The best way to fix your credit score is to figure out why it's low and to focus on doing the opposite. For instance, if your credit score is low because you are new to credit, then the best thing to do is to be patient and let your lines of credit age. If late or missed payments are depressing your score, then paying all future charges on time will be the best thing to do.

Question 2

What does it mean to consolidate debt?

Accepted Answer

Debt consolidation is the act of rolling multiple existing debts into a new loan. In turn, you only make a single monthly payment, rather than paying multiple monthly installments. It's a technique that's often used by people with high-interest debt, such as those with substantial credit card balances. The major advantage of debt consolidation is that it can offer lower interest rates and monthly payments. And since making one monthly payment is easier to keep track of than making several, debt consolidation can also make it easier to manage your bill-paying. However, to snag the very best interest rates, you'll need to have a good credit rating.

Question 3

How much money can you borrow with bad credit?

Accepted Answer

Your approved loan amount largely hinges on your credit score, financial situation, and the lender. While it's harder to qualify for a loan when you have poor credit or fair credit, some lenders look beyond your FICO score at other lending criteria to determine your creditworthiness. This could help boost your odds of getting approved for a loan with higher loan limits.
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No matter how much you borrow, it's important to look at the interest rate and fees and to plot out a repayment plan. On-time payments will help you boost your credit score and lower the overall costs of future loans.

Question 4

What are best bad credit loans?

Accepted Answer

Choosing the best bad credit loan lenders depends on your individual needs and financial situation. But typically the best lenders require a low minimum credit score, have an easy loan application, charge low or minimal fees, and provide other ways to help improve your credit score.

To find the best bad credit lender for you, it's important to do your homework and research lenders and compare rates. Check to see what the eligibility requirements are, what interest rates are offered, and what fees apply.

You can also prequalify for a loan online, which gives you an estimate of the loan amount, interest rate and terms you would receive should you officially apply and receive formal approval. Prequalification usually involves a soft credit inquiry and won't negatively affect your credit.

Question 5

What is the interest rate on a best bad credit loan?

Accepted Answer

Because lenders usually see borrowers with bad credit as posing a higher risk and being less creditworthy, the interest rate on a bad credit loan is generally higher than that charged to people with solid credit ratings. However, some lenders look at other financial factors when fixing a loan interest rate. Comparing lenders and getting prequalified can help you figure out what rates you might be offered. And adding a co-signer to your loan may lower the interest rate as well.

Question 6

What are the benefits of the best bad credit loans?

Accepted Answer

Bad credit loans can provide a financial lifeline to people with blemished credit histories, both in the short- and long-term. They provide an immediate infusion of cash that can be used to pay pressing monthly bills, pay down credit card debt, cover the costs of unexpected emergencies or help the borrower take advantage of opportunities. In the broader scheme of things, they offer a way that people can begin to improve their credit histories, thereby reducing the interest they'll pay on future mortgages and loans.

Question 7

What is the interest rate?

Accepted Answer

The interest rate is the amount a lender charges to loan you money. You can think of it as the price you pay for borrowing. The interest rate is a percentage of the outstanding loan balance calculated over a period of one year. Personal loans are installment loans, meaning that with each monthly payment you make, you chip away at both the interest owed and the balance due until the loan is paid back.
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Be aware that interest rates and APRs aren't quite the same thing. The APR, which stands for annual percentage rate, includes the interest rate along with any fees and charges for the loan. Also take note that unsecured personal loans tend to have higher interest rates than loans secured by the borrower's property.

Question 8

Is there a limit to the number of loans you can take out?

Accepted Answer

There technically isn't a limit to how many personal loans you can take out. You can take out personal loans from different lenders at the same time. However, when you formally submit an application for a loan, it results in a hard pull of your credit history that can depress your credit score.

If you want to take out a second loan with the same lender, you may find that your bank or finance company requires you to have repaid at least a specified amount of the initial loan, or to have made on-time payments for a certain number of consecutive months before you can apply for another loan. A lender might also have a cap as to the total amount you can borrow. If you don't meet the criteria, a lender might offer you a second loan after a cooling period.

When taking out multiple loans, you'll want to make sure you can stay on top of repayment schedules. Otherwise, being late or missing payments altogether means a dip in your credit score.

	Best Secured Loans	Best for Payment Date Flexibility	Best for People With a Short Credit History


	OneMain Financial	Lending Club	Upstart
	Our Partner	Our Partner

Company Highlight	Get access to your money the same day you're approved, in some cases	Lets you push back your next scheduled payment once or permanently	Uses job and educational history in addition to credit information to improve applicant's approval odds
Min. Credit Score	Not disclosed	600	No minimum score required
Est. APR	18.00%-35.99%	7.04% to 35.89%	3.50% - 35.99%
Loan Amount	$1,500-$20,000	$1,000-$40,000	$1,000-$50,000
Repayment Terms (Months)	24, 36, 48, or 60	36 or 60 months	36 or 60
Origination Fee	A flat rate ($25-$500) or a percentage of the loan amount (1%-10%)	3%-6%	0%-8%

5 Best Loans for Bad Credit

Our Top Picks for Best Bad Credit Loans

Best Bad Credit Loans

Best Secured Loans: OneMain Financial

Best for People With a Short Credit History: Upstart

Best for Payment Date Flexibility: LendingClub

Best for Building Credit: Self.inc

Best Online Lending Marketplace: LendingTree

Best Loans for Bad Credit FAQ