The moment the clock strikes five, you dart out the door, jump in your car and hit the highway for the long commute home. It’s Friday and you couldn’t be more excited about a night out on the town with friends. And although money’s tight, you’ve managed to scrape up a few bucks to enjoy yourself.
As you’re exiting the highway, your car begins to jolt and you hear a loud “pop”. There goes your tire, plans for the night and the little money you do have in your savings account.To add insult to injury, you learn that all four tires need to be replaced, along with one of your drive belts, or the car will soon be inoperable. Bummer.
But there’s an even bigger problem. You’re still $2,500 short and don’t qualify for in-store financing because you have blemished credit. So, you call the bank to ask for help and they tell you that your only option is a bad credit loan.
Should you take the cash or throw in the towel and catch public transportation?
If you’re in a similar situation, a bad credit loan may seem like a viable option. But before you sign your life away, here are some important factors to consider:
Pros of Bad Credit Loans
Despite the negative stigma that is associated with bad credit loans, there a few positives to consider:
“I don’t mind tossing and turning at night trying to figure out how to cover a financial emergency,” said no person ever. But this could easily be you if life happens and you don’t qualify for a loan from a traditional lender. Or, you could apply for a bad credit loan and upon approval, have the cash directly deposited into your bank account in as little as one business day.
Most lenders will report account activity from bad credit loans to the credit bureaus. And if you make timely payments, your credit score could receive a slight boost since payment history accounts for 35 percent of your FICO score. Most importantly, paying on time will demonstrate to future creditors that you can responsibly manage your outstanding debt obligations.