Your home equity can be used to get loans for people with bad credit. This is good news especially to people who cannot go to credit unions and banks. Unsecured loans may come with interest rates higher than traditional ones from commercial banks, but in the latter, the process can take too long and they require your credit score to be within a specific range.
No Credit Check
If you apply for loans for people with bad credit, no need for you to work out on your score in order to qualify. Many online lenders base their decision on your current capacity to pay on your debts with them. This can be gauged on your monthly income: How much you are earning and your existing financial obligations. It is your financial status now that matters and not the previous bad payment transactions that you have had.
However, as mentioned at the outset, the interest rate will be higher. This is because when you apply for loans for people with bad credit, it is presumed that you are a high-risk borrower. And to compensate for the no-collateral policy, they charge a higher interest rate—it is where they can get profits instead of foreclosing your property mortgage to them.
But when it comes to mortgage loans for people with bad credit, the interest rate will be a little lower than any other unsecured loans. The lending companies will still refrain from making any inquiry on your credit score.
Fix Credit Score for Lower Interest Rates
One way to get a lower interest rate on your mortgage loan is to improve your score. To qualify for such prime loans, your FICO credit score should not be lower than 640. Then you can mortgage your home equity at lower interest rate. But if you want your home equity to get a loan for other purposes such as debt consolidation, then home equity loans for people with bad credit can help you.
Loans for people with bad credit are generally provided by online lenders and other trusted lending companies. The interest rates and the amount vary. Since it is a policy that the interest rates are higher, such rates are not uniform to all lenders. The payment options, too, are different. So it is best to find a lender whose offers are to your advantage.