Poor credit scores are normally the sign of poor fiscal management by an individual. Lenders and banks use your credit score to determine whether or not you are dependable enough to borrow money to. They know a poor credit score means that individual hasn’t always been the most trustworthy with their credit accounts. Perhaps someone with a poor credit score has too much credit already opened or has held them self in credit debt for a long period of time. Whatever the reason is, a person with poor credit might not be determined as creditworthy enough to take out a bank loan. And if you are a person with bad credit, you might already know this.

Great Credit Means Great Treatment

It isn’t always fair as those with the biggest loans and lowest rates will be those with higher credit scores. It is because banks and loan lenders feel they are taking a much lower risk by trusting their money with someone who has been on track with their credit payment history. While running around to major banks may dig you up something, in most cases, if a couple major banks don’t accept your application for a loan, chances are others banks will probably not.

You Have to Pay Down Debt to Increase Your Credit Rating

If this is the case, opportunities still exist that may allow you to borrow and get a loan. The first step a fiscal management professional will tell you is to immediately get yourself as credit debt free as possible. This will cause an increase in your credit score, however doing this isn’t always something people are capable of doing over a short period of time. For some, credit debt is something they might not get out of by the time they pass away.

Two Loan Options for Bad Credit Rating Holders

You might have an emergency that requires you to get a loan as soon as possible. If this is what you need, there are plenty of loan lenders set up that feed directly to those with bad and poor credit. These credit lenders will generally provide you with two different options when examining the choices of loans you can take out. These loan types include a secured bad credit loan, and an unsecured loan.

Secured Loans

A secured loan is considered a better choice, financially, for those with bad credit. When applying for a secured loan, you must give up something of equal value to the loan. You are basically giving the loan provider a piece of collateral in case you default or go bankrupt while on the loan. These types of loans feature interest rates similar to those given to people with excellent credit from larger loan lending agencies.

Why is this an excellent choice for those with poor credit? Almost any type of loan you take out is considered a form of credit. If you give $5000 as a form of collateral for a $5000 loan, or 2 – 2500 dollar loans, you’ve just opened a positive source of credit. This shows on your credit report, and as long as you keep making your payments on time, it will show, as well. This in turn will increase your credit score. That will enable you to get larger loans from more mainstream lenders with lower interest rates.

Unsecured Loans

The other option open to those with bad credit from bad credit loan lenders is an unsecured loan. An unsecured loan is a better option for those with no type of money or assets available to give the lender as collateral in case of defaulting on the loan. However, the fees and interest rates are stiff. With some interest rates reaching more that 30%, if you can’t afford to pay much more than the minimum monthly amounts due, paying off the principle on the loan could take many, many years.

Simply put, unless you are in some dire financial situation, taking out an unsecured bad credit loan can be an extremely poor financial decision.

Be Careful of the Fine Print, Don’t Let Lenders Take Advantage of Your Bad Credit

Getting a bad credit loan isn’t always as difficult as it seems. There are plenty of lenders willing to lend you money, however, make sure you read the fine print when they ask for your signature. Some of the interest rates can be outstanding, making taking out a bad credit loan not the smartest of choices you could make financially.

To get yourself a proper loan, you will want to see what you can do to increase your poor credit score before anything else. Look at your current accounts of credit and ask yourself what you can do to start paying off those credit cards and loans that are making your credit score so low. Cut back on nights outside and spend more days relaxing at home, making dinner yourself instead of ordering out, and slow down your shopping habits. Put this extra cash towards your credit accounts and start paying off your debts. This will look very good to your creditors and show you are becoming more responsible with your credit. This can cause an increase in your credit score, and in turn make you more accountable to take out loans with better interest rates. However, if you don’t have the money it will take to start paying those loans back, avoid opening any more credit accounts if at all possible.

Negative information on your credit report can be reported for up to seven years, but sometimes longer if it is serious. The length of time noted in these bullet points means from the start time of your late payment or delinquency, not the last time you made a payment on the amount. Some collection agencies, though, will update their reports to keep your account active with the credit bureaus so they can lengthen the time a negative item stays on your report. You do have a right to challenge this and you should if it happens to you!

So what are some of the negative items that are put on your credit report?

• Bankruptcy information can stay on your credit report for 10 years
• Tax Liens can stay on your credit report for 7 years after they are paid
• US Government insured or guaranteed student loans can be reported for 7 years after certain guarantor actions
• An application for $50,000 or more worth of credit of life insurance can actually stay on your report forever.
• Information about a lawsuit or judgment against you can stay on your report for 7 years.

APR (Annual Percentage Rate) is a simple financial concept to grasp, however, calculating your APR is a much more difficult task. APR is the interest rate you are signed up to pay when dealing with credit and loans. Taking that interest rate you receive and dividing it by 365 (the number of days in a year) will give you a basic, yet not exact, amount that you will actually have to pay back in interest on any loan you take out.


For instance, if you take out a loan for $1,000 dollars at 10% APR and have to pay it back in one year with one payment, you are left with the equation of: ($1000 x 10% x 365 days (billing cycle of one year))/365 days) = $100 in interest. Add $1000 dollars to that and you will know the total loan cost will be $1100 dollars.

Of course this could never be accurate, especially if you are dealing with credit. Your credit account is constantly changing as you rack up purchases. If you pay off all debts before the end of a billing period, you don’t pay interest; however, if you can’t pay back the balance in full you can be stiffed with harsh APR interest. Following billing periods can increase the amount you own in interest if previous interest debts aren’t removed from the credit accounts.
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With the introduction of plastic money resources, credit cards and debit cards, it has been easier to get through payment processes with a swipe of that magnetic strip or simply entering in the digits on our keyboard to make purchases online. The debit card and credit card work similarly enough, and despite the differences being very vast, many people still can’t seem to spot why a debit or credit card may be better to use than the other. Being an informed consumer is an important step in making the correct financial decisions, and knowing whether you should use debit or credit is one of the first decisions you should make.

Where are you getting your money?

The most obvious difference between debit and credit cards is the source of cash from which you are drafting money from while making purchases. A debit card uses your bank accounts as its drawing source. While withdrawing money from an ATM or fueling up your gas tank, the money taken or paid is drawn out of the savings or checking account connected with that card. When dealing with debit cards, the limit on the money you use is exactly how much you have in your bank account.
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Credit card debt is one of the worst financial situations you can manage to get yourself in. If you are sitting there, looking at multiple credit card statements and only sending just enough money to your creditors to cover the minimum payments due, you are making one of the least efficient financial choices you could ever make. By the time you end up paying off those debts with minimum payments, you’ll have acquired so much in interest that you’ll pay double, or more, of what you actually racked up on those credit cards.


Failing to pay and continuing to dig yourself deeper into a hole of credit card debt, you’ll find your credit score gradually slip. This will affect nearly every aspect of your life. With a bad credit score you’ll have a more difficult time finding a better job. You won’t be able to purchase or lease that new hybrid-electric car you want because you can’t charge your credit card with the price of gas as it is. No bank will even come close to considering you for any type of loan, and if you somehow had the thought that you could buy a new house, kiss that dream goodbye.
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It’s safe to see that a majority of most consumers carry some sort of credit card, and it would be absurd to think that any entrepreneur wouldn’t have a credit card. The credit card is the best source of payment when we just don’t have that large amount of cash on our hands. Business owners and entrepreneurs can use credit cards to turn those otherwise fiscally impossible purchases into easily obtainable items and services until withholding payments until the end of their credit card billing period. For those able to manage their credit and financial responsibilities it is a powerful tool, but are you using the right tool?
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If you have absolutely no credit or no credit history, you could find it pretty difficult to apply and be approved to receive a credit card. The most likely reason reason you don’t have credit is because you’ve just turn 18. At the age of 18 you are legally allowed to be a new owner of that shiny credit card you’ve always dreamed of.

Wielding a credit card at such a young age can be dangerous. Young people are usually unaware of the dangers of credit card debt, and the ease of being able to purchase nearly anything you want, instantly, without cash makes that danger much more clear. However, establishing credit at a young age is easier than doing it later in your life. On top of this, credit will help you further down the road by allowing you to take out loans, create better opportunities for you in the job market, let you purchase/lease a car, as well as eventually allowing you to purchase your very own house. Ah, the power of the credit card is a wonderful thing.
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Gather together with 3 other adult friends and go out to dinner together. One question you may want to ask them, as well as yourself, is if they have checked their credit report for errors lately. In a recent survey, it was found that of all credit reports surveyed, nearly 25 percent of them reported some sort of error.

Many credit reports with errors go unnoticed to the person the credit report belongs to. While in some cases, mistakes may be small, others can cause huge dips in your credit score. These dips in your credit score can disable your chances to get jobs, acquire loans, as well as the ability to buy a new car or house.
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A credit score, put simply, is a number that decides how creditworthy and dependable a person will be when it comes to paying their bills and paying back money an individual has borrowed. This score is a simple 3-digit number that can summarize up your whole credit report to creditors and lenders, basically grounding you down into a “lend to” or “do not lend to” category. It’s an important number, as it is one factor that lets you take out loans for computers, houses, cars, is a main benefactor in the type of insurance rates you get, and can basically say whether or not you are reliable enough to have more credit accounts opened.
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How Many Credit Cards Should You Have?

According to statistics from loan and credit agencies, the average American holds anywhere from 5 to 10 credit cards, plus several loan payments. On average, that comes out to 13 credit accounts. That number is a bit outstanding according to credit experts. With all these credit cards and loan usages coming into play, this leaves nearly 85% of all Americans in some sort of non-mortgage related debt. Of those people, nearly 32% are in credit and loan debts of more than $10,000. Yikes!
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