There are few things as stressful as struggling with bad credit. If you find yourself in a financial emergency when your credit isn’t great, you might feel like there aren’t any options. In this circumstance, you might find yourself googling things like “bad credit loans guaranteed approval” in the hopes of making ends meet.
Is it a good idea to apply for a loan that promises guaranteed approval? Are all bad credit loans scams, or can you really borrow money when your credit score is less than ideal?
Having a poor credit score can have a devastating impact on your financial wellbeing, but falling victim to a bad credit lending scam will only make things worse.
Let’s take a look at what you need to know to help you make an informed decision.
Bad Credit Loans, Guaranteed Approval: What Are They?
Bad credit loans are loans that are given to people who have a short credit history or a low credit score. There are a number of things that can lower your credit score, including maxed-out credit cards or late payments.
When you have a low credit score, it limits your borrowing options. Bad credit loans are an option for individuals who haven’t had time to build credit history or whose credit score reflects some financial missteps.
Bad credit loans can either be secured or unsecured. Secured loans are backed by collateral like a car or a home, and unsecured loans aren’t backed by any collateral.
If you come across offers for “bad credit loans with guaranteed approval,” you will want to be wary. This might come in the form of “bad credit personal loans guaranteed approval” or for a variety of other loan types, like payday loans or even home loans.
The “guaranteed approval” part of this equation implies that the company won’t require a credit check in order to loan you money. In reality, no legitimate lender is going to give you a loan without determining your creditworthiness.
If you come across these types of offers, it’s best to steer clear. There are legitimate bad credit loans from more reputable lenders if you are in need of a loan.
What Is Considered a Bad Credit Score?
There are a number of different credit-scoring models that are used by financial institutions to determine your creditworthiness. One of the most popular is the FICO credit scoring system, which ranges from 300 to 850.
According to FICO, a score within the range of 300 to 579 is poor and a score between 580 and 669 is fair. Both of these are considered to be bad credit scores.
When you have bad credit, it can have a negative impact on your financial life. It can make it difficult to get approved for a loan and could affect your ability to purchase a home or rent an apartment.
If you have bad credit and you need a loan, you should expect to pay higher fees and very high interest rates. You might choose to improve your credit score before applying for a loan so that you are not penalized with such costly terms.
Guaranteed Bad Credit Loans: Are They a Scam?
When you are looking for bad credit payday loans with guaranteed approval, you are definitely going to come across some scams or, at the very least, instances of predatory lending.
It’s important to step back and consider the circumstance from the standpoint of the lender. Why would a lender want to loan you money without any sense of whether or not you will be able to pay them back?
At the very best, these are companies that are going to loan you money with outrageous interest rates and fees.
At the very worst, the whole endeavor might be fraudulent. They might charge you an advance fee that they say is for “processing,” an “application,” “insurance,” or something else. These companies will then run away with your advance fee without loaning you money, never to be heard from again.
(Do you have a better than average credit score? Check out this SoFi cash loan.)
How to Spot a Legitimate Bad Credit Loan Company
There are reputable, legitimate lenders who will loan money to people with bad credit. However, any claims of “guaranteed bad credit loans” should be viewed with suspicion from the get-go.
If you are trying to determine if a lender is legitimate, you will want to do a little research.
First, look to see if they have their contact information online. This should include their phone number, physical address, and email address.
Second, look at online reviews for the company. Be wary that reviews on a company’s website could be skewed in favor of the business.
Third, look at the Better Business Bureau. You can find customer reviews here and also learn whether or not the lender is trustworthy.
Lastly, make sure the company is registered with state agencies. You can contact your state’s attorney general if you aren’t sure if a lender is safe.
Guaranteed Loan Approval With No Credit Check: Is It Too Good to Be True?
The short answer is: probably. If a lender is truly promising “bad credit loans guaranteed approval,” it’s definitely worthy of suspicion. Any legitimate lender is going to want to at least do a basic check into your creditworthiness.
If you find yourself in a dire financial situation, a company that promises guaranteed loan approval with no credit check is likely going to do you more harm than good. That being said, you can find bad credit loans that are offered by reputable financial institutions. The cost of taking out a loan with bad credit, though, is likely going to be a very high interest rate if not costly fees.
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