Can you get a loan with a credit score of 550?
Every time we apply for a loan, lenders check the credit history of the borrower before deciding on whether or not to approve the loan. This helps the creditors determine the level of risk associated with the probability of the burrower repaying the loan. If the credit history is bad, then lenders are most likely to not approve the loan.
A credit score of 550 on the FICO score scale ranging between 300 and 850 is regarded as being very poor. Individuals with such a low credit score will experience may problems in getting approved for loans, credit cards, etc. Sometimes, burrowers with poor credit score may need to pay a processing fee or offer a deposit for lenders to look at the loan application. Even then, the loan may not get approved.
Payday loans for people with credit score of 550
Payday loans are common type of small-dollar short term loan that can be easily availed by individuals with bad credit. The amount that can be taken as payday loans with very low interest rates varies from a few 100 dollars to around $2000. The amount available as payday loan varies from state to state. Burrowers need to repay the payday loan from their next paycheck.
In most cases, payday loans need to be repaid within a month or two. The interest rates on such loans are as per the annual percentage rates (APRs) laid down by the state in which the payday loan lender operates. The lender will take the repayments directly from the paycheck (bank account) via ACH on the dates stipulated in the payday loan agreement.
Burrowers with credit score of 550 can apply for low interest payday loans same day online or at the office of the lenders. The application form requires burrowers to fill out their personal and financial details and then submit it for approval. In most cases, the loans get approved on the same day or after 1 day. Sometimes, the creditor may offer payday loans with no interest on the first loan, which means you only have to repay the principal and other fees and charges. After the loan is approved, it gets deposited directly onto your bank account.
Payday loans are available and legal only in some states in the US. Also, payday loan lenders need to have a license to operate in the state. Burrowers with bad credit need to check all the credentials of payday loan lenders before applying for payday loans with very low interest rates.
How to improve the credit score?
The credit score is affected by varied factors like payment history, credit mix and total debt, credit utilization ratio, recent credit applications, length of credit history, and public information like tax liens, etc.
You may improve the credit score by paying back your debt, including balances on credit cards one by one; regularly paying all your bills; taking out a secured credit card for minor purchases; and avoiding new applications for credit.
Do you need a credit check for a payday loan?
Payday loans are unsecured loans of small amounts that can be availed for a short term of a few weeks to a few months. You may avail of payday loans with very low interest rates for taking care of emergency situations such as car breakdown, medical issues, etc. Payday loans can be availed through online lenders or from their in-store facilities.
Payday loan lenders do not check the credit history of burrowers when they apply for a loan. Thus, people with bad credit can easily avail of payday loans. Burrowers only need to provide proof of employment and that they receive regular paychecks in order to get approved for low interest payday loans same day.
Payday loans have to be repaid as per the schedule mentioned in the loan agreement. The principal amount along with the interest, fees, and other charges are deducted from the paycheck till the loan amount is fully repaid. Payday loans are thus an easy option to get fast cash with no credit check. It also ensures that your loan history remains private as the application of loan is not reported to the credit bureaus.
It is important to note that payday loans are legal in some states, extremely regulated in certain states, and restricted in other states. Also, all lenders of payday loans need to follow the rules and regulations laid down by the state regulators. They also need to get a license to operate as a payday loan lender in the state. Additionally, the rate of interest, charges, fees, and all other associated expenses have to be clearly mentioned by the lender for the benefit of consumers. All the above facets, including no credit check, make payday loans with no interest on the first loan a really good option for quick emergency funds.
Pros and Cons of Payday loans
The pros are:
There is flexibility with regards to the repayment schedule of payday loans. Burrowers can thus align the repayments with the schedule of their paychecks and other income sources to ensure timely repayments and no missed payments. There is also the option of making extra payments and repay the full amount before the loan tenure is over.
Payday loans no interest on first loan can be availed by all, including people with bad credit. Low credit score does not hamper the approval process.
The process of taking out a payday loan is very easy. Burrowers only need to fill out their financial and personal details, online or at the office, submit it and get approved on the same day or a day after.
The disadvantages are:
Since there is no credit check, lenders are taking on a big risk by lending you a payday loan. Hence, the interest rate and fees can be quite high as compared to normal bank loans.
There are many predatory payday loan lenders in the market. Burrowers hence need to be careful in choosing only licensed payday loan lenders.