You are strapped for cash, but you need money immediately. You have just gotten a job, in another state, that will do wonders to your financial life.

Typically, you would visit your bank to check if you qualify for a loan but you fell behind your student loan payment and damaged your credit score. You now have bad credit and cannot access the loan from your bank.

Bad credit happens when your repayment of debts is filled with multiple instances of late payments or filings for bankruptcy. It tells lenders that letting you access a loan may come with the genuine risk of no repayment. They may, therefore, choose to deny you the loan.

Different financial institutions have different ways of analyzing your credit score, but the consensus is that a FICO score below 630 is terrible.

Having bad credit should not spell doom for your future. You can rebuild your credit score because there are institutions that offer Bad Credit Loans. However, you must understand the terms and conditions.

The following are the advantages and disadvantages of using bad credit loan institutions:


  1. Quick Approval

These institutions serve a particular market, so they know the types of individuals they are likely to come across. They only need to sit down with you to make sure you understand the repayment plan and legal implications of the contract.

This fact makes the wait for them to approve your loan relatively quick.

  1. High Approval Rates

Bad credit loan institutions have high approval rates for their loans. As stated earlier, they know the market they are serving and will not easily deny you a loan.

Although their approval rates range between the high 80s and low 90s, there are certain situations in which you can be denied a loan.

  1. Large Amounts to Borrow

When you are in deep financial trouble and need access to large amounts of money to offset some payments, these institutions can come to your rescue.

The large amount, however, comes with a considerable interest so be cautious when you are reading through the terms and conditions.

  1. A chance to Improve your Credit History

Bad credit loans give you the chance to improve your credit history. Getting out of a financial hole requires drastic measures. Without access to loans, you may take a long time to improve your credit.


  1. High-Interest Rates

Bad credit loan institutions charge very high interests compared to regular lending institutions. This loan may initially help you clear your debts, but you may encounter difficulties paying for the loan due to the high-interest rate.

  1. Bad Lenders

It has been argued that bad credit loan institutions capitalize on the desperation of the applicants. This desperation makes people sign deals when they have not read and understood the fine details of the contract.

You will find more bad lenders in the bad credit loan industry than in regular financial institutions. You should be very careful when choosing a lender.

  1. Getting Stuck in a Never-Ending Cycle

You do not fix a problem by creating another problem. Taking loans to pay existing loans may keep you in a vicious cycle that you will struggle to get away from.

Conclusively, you can still rebuild your credit score even if you currently have bad credit. Some good lenders will grant you access to loans even if you have bad credit. Nevertheless, you must read the fine details of the contract.