Bad Credit Score Can’t Deprive You from Borrowing Cash Advance

FICO credit scores are crucial for obtaining a long-term loan such as a mortgage, business loans, big personal loans, lines of credit etc. On the other hand, lenders of fast cash advance loans don’t take into account any credit activity, thus making these types of loans available to anyone who needs fast cash. Anyway, it is important to understand what makes your FICO score and this is the main topic of the article.

Problems

Here are the problems that people with bad credit scores face:

  • You are most likely to be denied any significant long-term loans:
  • Mortgages;
  • Personal loans of thousands of dollars;
  • Auto loans to buy a new car;
  • Conflicts with the landlord;
  • Banks tend to give much higher APRs to people with bad credit because they pose a high investment risk. Here are the figures according to myfico.com:
  • A person with a score between 720 and 850 (the best possible scores) gets a rate of 5.49% and a monthly payment of $851
  • Someone with an average good score of 620-674 gets a rate of 7.30% and a monthly payment of $1,028
  • A person with extremely bad credit (500-559) will probably fail get a rate lower than 9.29% and a monthly payment of $1,238, assuming he/she is granted the loan at all.

As you can see, a person with bad credit ends up paying hundreds of dollars more per month compared to someone with good credit.

Explanation

Your credit score is made of 5 main things in the order of their importance:

1.Payment history

  • Late payments increase your credit risk only if there is a pattern. If you were late every now and then, you should be in the clear.
  • It doesn’t only matter that you were late. It also matters how late you were, how much you had to pay, and how long it’s been since then.
  • There are several factors that will heavily damage your score. What they all have in common is that it’s difficult to take the eyes of the underwriter away from these factors.
  • Bankruptcies –these will follow you for 7-10 years to come;
  • Lawsuits – if you have been sued for failing to pay your debt, things aren’t too shiny for you;
  • Liens;
  • Foreclosures;
  • Judgments;
  • Wage attachments.

2.Amounts owed

  • Owing big money is not necessarily bad. Things become ugly when you are buried in debt and you didn’t even pay it on time. (see factor #1).
  • The score not only takes into account the entire amount owed, but also how much you have to pay on different types of account.
  • Don't use much of your credit so that you keep the debt to credit ratio below 30%.

3.Length of credit history

  • The general tendency is that longer credit history affects your score positively, but factors #1 and #2 can nullify this short boost.
  • The average age of your accounts matters.
  • Consider when you opened your first and last credit account.

4.Types of credit available

  • The rule of thumb here is having several types of credit lines for which you make regular on time payments.
  • Although you might think exactly the opposite, if you don’t have any credit at all you are seen as high risk. The explanation is that lenders have no way to predict your behavior as a borrower.

5.New credit

  • Don’t open many new credit lines at small intervals;
  • If you can act responsibly, take some new credit to improve your score.

Conclusion Knowing what makes your credit score is important, but what should concern you more is that fast cash advance loans from lenders don’t care about credit scores at all. They perform no credit check so that such products are available even to people with the worst score ever.