How do people pull out a loan with bad credit?

Answer 1

You're going to have to raise your credit score. The quickest way to do this is put $500 in a savings account and then ask for a loan of $500 using the bank account as collateral. Make 2 payments then take your original out of the savings and pay back the loan. Do this three more times. On the fourth time, raise the amount to $1,000 ---repeat. Your credit score will go up considerably in the short time of a year or so, then you can ask for just about anything you want, and get it.

Answer 2

There are companies that will provide loans to people with bad credit, but it just costs you more money through the high interest rates. You could check out this site as a starting point for loan research, info. and quotes. http://loan.divinfo.com/

Answer 3

They normally go into a 2 or 3 year fixed adjustable mortgage. Where the payment is fixed for 2 or 3 years, that gives them time to hopefully build their credit to get a better rate. Or they pay the higher rate of 1 percent - and go with the 30 yr fixed, or 40 yr fixed, there are even 50 yr fixed programs now.

Lenders look at the middle score...of the 3 scores. If you only have 1 score or 2 scores (have seen it), it is still workable....but unless a lender sees the whole picture - credit - income - job time, etc - than you will not have a "true" picture of what you can afford - Hope this helps - There are also Government programs out there, but they too are looking for job time, etc.....They are not so much looking a credit - but the other factors are taken into consideration. With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true.

There are other factors to consider, besides credit. Medical Bills are Over looked by underwriting (since medical is a unforseen event), where as credit cards, are looked at (since you purchased items on a credit card.) Also, Job time of 2 years, Rental history for 2 years is looked at. What collections & judgements are on your credit report. Some collections may not have to be paid off. Judgements may need to be paid off - depends on the Lender and Their Underwriter. All of these are taken in as a factor on getting a home loan. Credit can be worked on, by adding alternative credit. If you are paying regularly on a cell phone, auto insurance, rent, etc - these are called alternative credit.. All is not HOPELESS - ok - take a deep breath. If your credit score is 500 or higher, anything is workable, with a seller second - etc the higher the credit score the better. Lenders look at the middle score...of the 3 scores. If you only have 1 score or 2 scores (have seen it), it is still workable....but unless a lender sees the whole picture - credit - income - job time, etc - than you will not have a "true" picture of what you can afford - To get 100 percent financing you will need a MIDDLE Credit score of 580, but, like I mentioned there are Sellers 2nd, and as I mentioned FHA does not necessarily go by your credit score, but they DO look at your credit for collections, and judgements that appear on your credit report. There is also the USDA Rural program, where your payments are based on your income. (They to look at collections and judgements on your credit report), if medical, you would need a letter of explaining what happened. It is harder to qualify for, and there is a lot of paperwork involved. But, if it is worth the lower payments based on your income, than the paperwork is worth it. Hope this helps - .. Good Luck.

Answer 4

They pay higher interest rates.