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Monday, February 23, 2009

Can Bad Credit Personal Loans Help Your Finances?

By Tyson Dangerfield

If you have applied for a loan before there is a good chance that you like many other people were denied and told that you need a bad credit personal loan. If this describes you then it is no fun but lucky for you it only seems like the end of the world.

So do not go ballistic and just settle down and asses your situation. Let us look at a few things we can do to improve our credit so that we do not need to get a bad credit personal loan with high interest rates and short pay back times. Remember that the higher your interest rate is the more you will have to pay over the course of the loan which stops you from paying a lot to your other debts.

Before you can fix your credit you need to know where you are at. So do a personal accounting and figure out your total debts and the interest payments you make. Then go and get a credit report. If we can fix this then we can avoid a bad credit personal loan.

The credit report will have all of your outstanding debts according to the credit bureaus. While there is controversy regarding the bureaus that is the system we have right now so you will have to deal with it. Ignoring them will make you pay an inordinate amount of money for any loan you do.

When you are going over the credit report it is important that you find and correct any errors that it may have. Sometimes there are enough mistakes that you can fix the whole thing with a few phone calls. Typically however you won't be able to do this and you will also have to pay off some debts.

If you don't have errors figure out what debts you can rapidly pay off. Ideally you pay off the higher interest rate debts first and then focus on the easier debts that don't hurt your score as much.

The next step is to see if you can get a lower rate and possibly more credit with your existing cards. If so then it will look better for your credit score and your new loan can be on decent terms.

Now that you have done everything you can it is time to apply for the loan once again. Hopefully you do not need a bad credit personal loan but instead can get a regular low interest rate loan. To avoid this in the future make sure and pay your debts on time and pay attention to your credit score.

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