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Small Bad Credit Loans Can Aid Credit Recovery
Not only bad credit loans are the only source of funds that those with a poor credit score can count on, also, with the use of small bad credit loans it is possible to raise credit score and improve credit history. The process, as incredible as it may seem is rather simple and with a few months of bad credit loan repayments you can get your credit back on track.
Using bad credit loans for improving credit score and history has its benefits and its drawbacks too. There are many factors that need to be taken into consideration before jumping in to request a bad credit loan. Specially, there are two issues that you should take special care of: Making sure it is a small amount loan and knowing for certain that you will be able to repay it on time.
The Small Amount Requirement
Most bad credit loans come in small amounts, however, even if you can get higher amount loans, it is imperative that you keep the amount small in order to succeed with this credit recovery program. Otherwise, a low income to debt ratio will affect your credit score negatively and you would be getting exactly the opposite results that you want.
Small loans can guarantee that you will not have difficulties in repaying the money owed and that your credit score will not be affected by the new debt you have incurred in. Moreover, the continued repayment of these loans will keep getting recorded into your credit report, improving your credit history and thus increasing your credit score.
Assured Repayment: The Income Requirement
As far as possible, the lender needs to know that you will be able to repay the loan. Thus, you will be required to show proof of a steady income and this implies that you will have to provide copies of paychecks, tax presentations, etc. This is a very important requirement since you are applying for a loan with bad credit and the lender is running a great risk.
Of course, the income needs to be good enough so you can afford the monthly payments without sacrifices even if unexpected expenses arise. Thus, some lenders fix the monthly payments at a 40% of the monthly available income of the applicant. Some lenders also require that you show that you have remained in the same job for at least one year. If you have changed jobs recently but within the same field, this requirement may be bypassed.
Where To Apply
The best way to find the right lender for applying is to do a quick search online. Just select your preferred search engine and seek bad credit loans. When asking for information to the different lenders you will be presented, remember to request only small amount loans as thats what you are looking for and ignore other offers.
You can request loan quotes from different lenders and compare what each of them has to offer. After you have selected the loan and lender that best suits your needs, you just need to fill the online application and wait to be contacted by them. Remember to make sure you can afford the monthly payments so you do not miss an installment or pay late. Within a short period of time you will improve your credit score and history.
Can You Ask Your Credit Card To Lower Your Interest Rate?
If you think that the interest rate of your credit card must be reduced, dont just sit there and wait. Credit card companies wont volunteer to lower your rate if you wont ask them to. Surprisingly, a recent study reveals that 57% of credit card holders simply phoned in their requests and were granted a lower rate without any difficulty. So if you think youre a good candidate, pick up your phone and speak out.
Why Ask for a Lower Rate Lowering your interest by even just 10 points or less can bring huge savings to your budget. Just imagine bringing down your 19% interest to just 10%. Now certainly, that makes a big difference. Although it should be your goal to pay off your balances in full each month and avoid the interest altogether, there may be instances when you have to carry over your balance. Reducing your interest rate protects you from the risk of bad credit.
Are You a Good Candidate? Nevertheless, credit card companies wont just lower their rates for anyone. Are you a good candidate? First, check your credit report and gauge your credit rating. If youve been consistent in submitting your payments on time to all your creditors, you should have problem maintaining a high credit score. Paying off your monthly charges in full also makes you an ideal customer for creditors.
Your debt to income ratio may also be considered. How much do you spend each month and how does this compare to your earnings? Do you frequently carry a large amount of charges on your card? Do you often maximize your cards credit limit? Financial experts recommend not using more than 40% of your given credit. Using more than 505 or worse, exceeding your credit line would make you a high-risk borrower in the eyes of creditors.
Also, you need to consider the type of credit card you have. If youre using a secured credit card or a bad credit credit card, you may not be in the position to demand for reduced rates. Since youre regarded as a high-risk borrower, you cant expect your credit card company to reduce your rates just because you asked them to.
What to Say If you enjoy an excellent credit history, theres no reason why you shouldnt deserve a lower rate. The question is, what should you say to your credit card issuer? What points can you use to convince your credit card to reduce your costs?
One strategy is to research about the interest rates that other credit card companies offer. Based on your research, compare them with your credit cards rate and use this argument to request for a lower rate. You can also point out that youve been a long time customer (and a good payer at that!) and that youll like to stay within their company but that other credit cards seem to offer a better deal. Ask them if they could match that offer.
If the person you talked to insists that it is not in their power to make adjustments on fees, ask to speak with the supervisor. If your request is initially rejected, dont lose hope. Call again after a month or two and see if theyll be more agreeable to your request. While waiting, continue to improve your credit score and youll have better chances of getting a positive answer.