Unsecured loans are considered a greater risk and so the interest rates on these loans will be higher than on secured loans. Since this type of loan is not secured by any valuable property but only a “promise” of repayment, the borrower would be required to have a good credit history. Credit history is provided by a credit report, and reflected by a credit score known as a “FICO”.

You may be shopping for a bad credit loan:

• If you have a history of late payments
• If you have missed payments
• If you have ever defaulted on a payment

Payday Loans do an enormous business in poor, lower income, and even middle income neighborhoods. Often seen behind neon lights and barred windows – looking like pawn shops with an adjacent liquor store, they may also cash checks for a percentage. A payday loan provides the borrower instant cash with the understanding that he will pay back the amount on his next payday. These loans, also known as costly cash, are not secured.

Other types of financial assistance include debt consolidation loans that help forestall forclosure and bankruptcy, student loans, and student loan consolidation

For businesses, assistance is essential in starting the company, purchasing inventory, or investing in capital equipment. The government doesn’t back private lenders, such as Mr. Luciano, so your credit history is very important when being considered for a personal loan. If your credit history is bad or non-existent, you will undoubtedly be charged a higher interest rate.

Remember, you can always get a personal loan with a co-signer, and by making timely payments, you’re credit history will improve. As your FICO score rises, you can lower your interest rate, stop worrying about your kneecaps, and find plenty of legitimate lenders.

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