Expert Advice About Short-Term Loans for Bad Credit

Do you have an unexpected personal or business expense? A short-term loan is often the solution. However, a lack of credit history or a bad credit score can hold you back.

If this sounds like you, you’re not alone. Many people struggle to access the funds they need due to unimpressive credit reports. Indeed, it is such a common problem that a U.S. government website offers advice on how to check your credit report.

Fortunately, there are options for bad credit borrowers. In this article, we examine different types of short-term loans for bad credit. We also offer expert advice on how to avoid getting scammed by illegitimate lenders.

What Is a Bad Credit Score?

A credit score is a three-digit number that rates your creditworthiness as either good or bad. When it is low (bad), it can affect the likelihood of loan approval.

Credit score ranges can vary significantly depending on the credit scoring model used and the credit bureau with whom the lenders check your score. However, most lenders (including mortgage lenders) tend to rely on the FICO scoring model.

FICO scores range from 300 to 850. Scores higher than 670 are generally considered good. Therefore, anything lower is a bad credit score. And the lower that number is, the harder it is to be approved for credit or get a loan.

Businesses Have Credit Scores Too

Credit scores don’t only apply to individuals. Businesses have them too. So, what happens if you are a new business, with minimal credit history? In this scenario, your personal credit score is more important when applying for a short-term business loan.

A bad credit score makes obtaining funding difficult. Fortunately, bad credit short-term loans are available for people with low credit scores. Tackle that bad credit score with our step-by-step guide to building better business credit.

What Is a Bad Credit Short-Term Loan?

Sadly, the people with low credit scores are often the ones in the greatest need of credit or a loan. This is why short-term loans for bad credit exist. These loans meet immediate urgent financial needs. However, they have to be repaid within a few weeks up to 12 months.

Most short-term loans have terms of 3-6 months.

Where to Find Bad Credit Short-Term Loans

There are three main options for finding short-term loans for bad credit. These are credit unions, banks, and online lenders. Let’s look closer at them.

Credit Unions

Credit unions are financial cooperatives that offer many traditional banking services, including personal loans, business loans, and short-term loans for bad credit borrowers. They generally charge lower interest rates and fees than traditional lenders like banks.

Banks

Banks are traditional finance institutions that most people turn to first when looking for loans. However, it can be very difficult to get approved for a loan with a bad credit score. Whether you’re looking for a personal loan or a business loan, banks typically have stringent requirements.

You’ll need a valid bank account into which the loan amount can be paid, and from which to make your repayments. It helps if you have a bank account at the institution where you are applying for a loan.

Online Lenders

Online lenders are becoming a popular way to access short-term loans for bad credit. They often help people with loans when banks will not. However, they offset the risk of lending to people with minimal credit history or poor credit scores by charging a high interest rate.

Find a Bad Credit Short-Term Loan With E-Boost

Researching, applying for, and waiting for approval of loans can be daunting. Dealing with banks and credit unions is often stressful because you’ll have to meet stringent eligibility criteria. A good credit score is usually one of the most important of these criteria.

Online lenders make the process as painless as possible, and typically with fewer hurdles to loan approval. However, it’s difficult to know who to trust.

Luckily, you don’t have to go through any of that. Find a bad credit short-term loan with E-Boost Partners. We help individuals and small businesses find a variety of loan offers, including short-term loans for bad credit.

E-Boost will help you find loan offers that are right for your needs. So you can rest assured that you’re applying for a loan at a reputable lender. What’s more, the application process is quick and the approval wait time is noticeably shorter than with traditional lenders.

Types of Short-Term Loans for Bad Credit

There are different types of short-term loans for bad credit. Some of these are offered as personal loans, and some are business loans for bad credit.

Unsecured Loan

An unsecured personal loan does not require you to put up collateral. This is good news, as you don’t stand to lose any assets if you default on the loan. That said, it is more difficult to get a short-term loan without collateral when you have a bad credit rating.

Unsecured loans include both revolving and term loans and may be the solution you’re looking for. Check our guide to secured vs undecided loans if you still can’t decide.

Payday Loan

If you’re having no luck getting approved for bad credit personal loans, you could try a payday loan. These are short-term loans repaid with your next paycheck. As always, the amount you can borrow depends on what you earn. However, only small amounts are possible with payday loans.

Many lenders offering payday loans don’t require a credit check for approval, so a low credit score is not a problem.

Cash Advance

Do you need access to cash fast without applying for a loan? An Amazon merchant cash advance, one of the Amazon loans on offer to their online sellers, may be the answer. This facility is available to small business owners on the platform and is based on their past sales and the projection of future sales.

Not an Amazon seller? There are other types of cash advances. Credit card issuers usually offer cash advances if you have a business credit card.

How to Compare Short-Term Loans for Bad Credit

When comparing online loans, remember that repayment terms must be affordable. Consider not only the monthly repayments on the principal amount but also the interest charged. This can vary widely between loan types and lenders.

Some short-term loans for bad credit won’t charge much interest. However, most will, as borrowers with bad credit scores are seen as high risk for late or non-payment. Secured loans will have less interest. However, you will then face a higher risk, because non-payment could result in forfeiture of assets.

Compare the loan options available to you. Take note of which options have the most favorable terms and interest rates. Some lenders report to credit bureaus too. By making your monthly payments on time, you will boost your credit score.

How Your Loan Term Is Determined

Lenders who offer short-term loans for bad credit are understandably concerned about the risk of non-payment. Therefore, they consider various criteria when deciding on loan terms. Most often, this includes the borrower’s credit score, credit history, payment history, and existing debt-to-income ratio.

Based on these and other pertinent factors, such as how much you want to borrow, a lender will determine the most favorable terms. They know that the longer they give you to pay them back, the more likely they will get paid in full.

How to Identify Short-Term Loan Scams for Bad Credit

Too many people have been scammed by online lenders offering loans for borrowers with bad credit. Don’t let it happen to you. The lender behind any type of loan, even a bad credit loan, is subject to rules and regulations. This is easier said than done, however. Scammers often fool people with websites that look authentic.

A reputable lender will have a proper website and its own domain name. They will have contact details and often a physical address listed on their website. They may also feature reviews from satisfied customers.

Scam websites may not have their own domain name. Even if they do, other clues will alert you to potential problems. For example, you may find very little information and incomplete contact details on the website.

Three Telltale Signs

Admittedly, a dearth of information online might not necessarily be hard evidence of shady dealings. However,  there are three telltale signs that a lender is not all they appear to be.

• Upfront fees. Origination fees may be charged on some types of short-term loans, once the loan is approved. It is often included in the monthly payments. However, no reputable lender will charge you an origination fee before approval.
• Too-good-to-be-true promises. If it looks too good to be true, it probably is. So when a lender guarantees you a business loan for your brand new business, with no credit history and bad credit, it’s ]unlikely to be true.
• Very low interest rates. This is highly unlikely because firstly, most short-term loans carry higher interest rates. Secondly, bad credit borrowers present a higher risk, which in turn incurs higher interest rates on your monthly payments.

Conclusion

Are there short-term loans for bad credit? Yes, there are. You have several options to choose from. However, a poor credit history or low credit score often means paying higher interest on short-term loans. It also makes you vulnerable to disreputable lenders who are out to make a quick buck at your expense.

You can avoid all the hassle and uncertainty by applying for a short-term loan or a line of credit through E-Boost Partners. We help people access expert advice and legitimate loan offers, even with insufficient credit history or a bad credit score.

Take control of your credit score and your financial health, today by contacting us for more information.