October 8, 2021
HOW DO TEXT LOANS WORK FOR PEOPLE WITH VERY BAD CREDIT SCORE?
By : Ellie Brown
Small loans are more in trend, especially after the pandemic. Individuals are struggling with their personal finances, as they are continuously facing issues like furlough and unemployment.
The need for quick funding is apparent, and text loans have a significant role to play. These are short-term loans applicable during financial emergencies. One can say that these loans suit best during urgencies, as long term funding may not be possible.
The nature of these loans is unsecured. However, the loan aspirants do not need to submit the collateral against the loan, due to which interest rates remain on the higher side.
Borrowers are ready to go for these loans despite these are expensive. The primary reason is the quickness and easiness of getting sufficient funding to calm down the urgent expenses.
Some people also compare text loans with payday funding as most of the features of both these loans are quite similar. For instance, the loan term is short, and both are unsecured as well.
Nevertheless, in one place, text loans score and payday loans are assistance for people with bad credit scores. Yes, payday loans are pretty expensive for these individuals. Text loans, on the other hand, are comparatively flexible in the interest rates.
What are the Features of Text loans for Bad Credit?
Text loans are also called mobile text loans, where borrowers just have to send a text message to the lender. After that, the lender quickly responds to them and arranges the loan deal.
The same loan procedure will remain the same for the bad credit people. There are many more features of these loans where borrowers can make full use of them.
- A past credit score does not matter
When you are applying for these small loans, your past credit score does not matter. It generally happens with long term loans. The lender does not take an interest in what you have done in the past. They are more primarily interested to know your present credit performance. If you are doing nicely in recent bill payments, you have every chance of getting loan acceptance.
- A soft credit check is there
Another feature of small text loans is that you do not need to worry about the hard credit check. The borrowing amount is small, and lenders feel little risk in funding it. Therefore, they do not prefer hard credit checks as they significantly impact the borrowers’ profile.
- Loans come only on affordability
Text loans are available according to the borrowers’ repayment capacity. Lenders are too much specific and, in fact, obliged to provide only affordable loans that aspirants are able to repay. Since you already have bad credit, you may not get loans beyond your affordability.
Advantages of Text Loans for People with Bad Credit
Small loans like mobile text loans are in trend because of their easiness. Borrowers find it easy when they are looking for funds instantly. Of course, the online nature of the loans has a significant contribution to them.
There are many more advantages of text loans, especially for people with the less-than-perfect credit score.
If you earn a good full-time income or sufficient part-time earning, the lender may assign affordable loans. These loans are beyond any complications. It means you do not have to go through many loan obligations to get approval. However, you need to pursue the loan procedure sincerely with no mistake.
- Best source to improve credit score
There is the fact that small loans have little impact on the credit profile. At the same time, there is another fact that if you pay the entire loan instalments on time, you will see a valuable improvement in your score. It means you have dual benefits, i.e. no fear of losing your credit score more and some enhancement in the financial records.
- Guarantor’s presence is not binding
Text loans do not need any guarantor to back your loan application. You can also say that these are no guarantor loans. The approval criterion is your income source and its strength to repay the borrowed sum. In fact, it is another reason why text loans are preferable for instant funding.
Disadvantages of Text Loans for Bad Credit
Loans are there for financial assistance, but they also include some risks. You are the borrower and need funds, but not for the sake of your financial balance.
Some of the possible risks involved with text loans for poor credit people are:-
- The most significant threat with text loans is the higher interest rates. You have to agree on this because the lender is not demanding collateral or the guarantor’s presence while signing the loan contract. It may increase more burdens on your finances.
- Loans are online. You need to work harder to find out the responsible lending agency. You may trap into the wrong deal where hidden charges are available. However, some reliable lenders are also there offering loans with only interest rates to pay.
- Timely repayments of the loans are essential. If you miss any of the repayment, you may hurt your credit score. You should go for loans when you are confident about the loan repayments. Otherwise, wait for some time and increase your affordability.
A Comparative Conclusion
Text loans are among those small loan options that have an enormous sphere for quick financial aid. The easy availability, which is at your fingertips, is perhaps the primary reason for many others.
Some risks are also there, but if you are carefully dealing with the loans and the lender, things might be in your favour.
However, we would like to suggest that you should not approach these loans when you need a substantial financial goal to accomplish. These loans are the best suitable when you apply during the financial emergency.
Some lenders are specific about the loan purpose, while some do not ask. You have to use the loans for the proper purpose and borrow within your affordability.