Bad credit loans tend to have a lot of myths surrounding them, and sometimes we end up confusing their reputation with reality. The most common one of all is that if you’ve never borrowed money, you have a clean record. Also, there is the misconception that because you’ve taken various loans throughout the years, you won’t receive another loan.
Let’s look closer into the debate of bad credit loans and see which ones are true or false!
Myths about Bad Credit Loans
- Bad credit loans won’t haunt you for life
People tend to believe that home loans are bad credit loans, when in fact they are a solution to a problem. Lenders specialised in this kind of situations will offer you the best way to buy a house while dealing with the payments.
- More credits are worse than a single large credit
Dividing your payment into smaller ones won’t help your case, and the lender won’t regard it with kind eyes. The history of your balance will determine whether you get a higher credit score or a lower one. Keep in mind that large loans aren’t bad credit loans.
- No credit & no debt = great credit history
Unlike what people might think, not having a line of credit isn’t a good thing. This actually shows that you’re not a reliable person. Someone who has taken loans and paid them on time is more likely to receive a loan, as opposed to an individual who has never borrowed money.
- Bad credit loans can never be fixed
In order to have a good record, you need to start making the payments on time. Skipping payments or not being able to support them leads to a bad credit history and further to bad credit.
- A debt isn’t a negative aspect
As long as you pay each month, you won’t encounter any problems. On the contrary, taking loans and paying them back shows that you are a reliable person who can keep his/her word.
- It’s almost impossible to take a loan
If you’ve never taken a loan before, the lender will check your identification, then your account history. Also, he will look into public records and then determine if you seem likely to pay your credit or not. Sometimes, they’ll ask for an authorised user or for you to provide cash, as collateral.
- Your education level can be in your favour
Race, national origin, marital status, religion, gender and education are not factors that will give you any advantage. Credit scores won’t be affected by any of these elements, and the only thing that can boost your chances of receiving a bigger loan is your history with the lender and your record.
Even if you’ve paid a loan back, bad credit will remain on your credit report for up to seven years. So, be very careful and try to avoid this situation as much as possible. Also, make sure to consult with a specialist before signing for a loan.