Article by Jeremy Englewood

Despite lenders’ tightening their lending policies and going slower on lending, low credit score loans remain in existence. The U.S. government is seeking ways to make money available to the American public in order to help them weather the hard times. There are several kinds of bad credit score loans still available:

Home Equity Line of Credit. You can use your home as collateral to get a new loan. The home’s equity should be at least 20%, and if you have a low credit score, expect to pay more in interest rates than if your score is above the 720s.

Personal loan. Some banks and lending institutions still offer personal loans, at a price. For low credit scorers, interest rates will be high and loan terms will be stricter. Most lending institutions will ask you to put up something of value as collateral against the loan.

FHA streamline refinance. To qualify for a streamline refinance your loan must be current, with no delinquencies in payment for the past twelve months. In addition, you must have ownership to the property for at least six months. A no-cost streamline refinance allows you to avoid shelling out more cash except for the closing costs. Expect to pay a higher interest rate, though. If you wish to include the closing costs in the new loan, you will need to have enough equity on your property, the value of which will be determined by the lender after conducting an appraisal.

Debt consolidation loan. You can reduce monthly payments on your debts through a debt consolidation loan. If you do your rate shopping carefully, you may find a lender who will give you a fixed interest rate or a lower interest rate than what you are currently paying for your existing loans. This will allow you to pay off debts sooner than you normally would.

Secured loans. Bad credit score loans in the form of secured credit cards allow you to have access to money even with a poor score. Secured credit cards will require you to put up a fixed amount as a deposit. In many cases, the amount you will be asked to put up is equivalent to the credit limit. Judicious and timely payments on secured loans will, after some time, encourage the lender to offer you a guaranteed unsecured card. This is a great way to start rebuilding a poor credit score, or build a credit history if you currently don’t have one.

105% Loan-to-Value Refinance. Under President Obama’s 2009 American Recovery and Reinvestment ACT, homeowners who are seeking to refinance their loans but don’t have enough equity (at least 20% is needed) on their property can apply for a refinance if their original loan is held by Fannie Mae or Freddie Mac. People with very low credit scores can apply for this loan, and interest rates have been set to very low numbers in order to help the public recover from the financial crisis.

Check out our website for advice on best practice measures for low credit score loans, how to interpret the information in your credit report, and ways you can rebuild your credit score without having to go for credit counseling.

About the Author

Jeremy Englewood is a credit manager and writer with over fifteen years experience in the banking industry. His sensible and practical advice on personal finance topics have provided inspiration to people who want to establish or repair their credit. You can read more of his articles at HowToEstablishGoodCredit.com.

Tagged with: credit • days • Kinds • loans • score • these

Filed under: Bad Credit Home Equity Line of Credit

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