Can an Instant Bad Credit Loan Actually Make You More Attractive to Lenders?

For those with a poor credit history, an instant bad credit loan can seem like manna from heaven. Just the idea that you could suddenly be handed the money you need tends to make those with a bad credit history perk up and take notice. But is it a good idea? Is it possible one of these poor credit loans could actually end up making you look better to potential creditors?

The answer is yes! Let me explain why.

Let's say you are one of those good people who bad things happen to on occasion. For example, you may have all the best intentions of paying your bills on time but you may have gotten into some financial difficulties that made paying late the norm rather than the exception. It was never your intention to end up with a low score on your credit history but that's what ended up happening.

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Now let's say you need some money for something, and not just a few hundred bucks but a big chunk like a couple thousand or even more. You are kind of stuck because lenders don't consider you to be a very good risk (not hard to see why, right?), so you may have a tough time finding a loan. So you'll be forced to go to a lender who specifically makes a point to make loans to people with poor credit. (Yes these lenders exist!)

So you go ahead and obtain a loan from one of these bad credit lenders. Now, you realize that this loan will have a higher interest rate than usual. The reason for this is that even though you know you plan on making your payments on time from now on, you haven't done so in the past so your lender has to take all your history into account. This leads them to think you might be a credit risk so they hike up the interest rate accordingly.

But, now that you have your money, do everything in your power to make all payments on time. After a certain amount of months have passed you will see your credit score start to improve. As more time goes by and you may find yourself in need of a new car or even a new house, you will now look much more attractive to the banks, and you will have no problem obtaining a loan usually with a much friendlier rate of interest.

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