If you need money for a large purchase like a car or a home, or if you are going to college and need help paying tuition, you probably are going to have to apply for a loan. How easy this will be will depend on how much money you make, what your credit rating may be, and how long you have been making payments on other things like credit cards or other loans. When you apply for a loan, be prepared to have your financial habits and your spending and repayment history examined under a microphone.
If you apply for a loan and you have bad credit, be prepared to be disappointed. You may not be able to get a loan anywhere. When this happens, you have to take some time to repair your credit and up your credit score. If you do manage to get a loan, you are going to pay an interest rate much higher than those with decent credit. Banks do this because you are a higher risk, and they know it. If you are ok with this, and you pay your loan payments on time, you are doing a lot to repair your credit standing, and you may get a better interest rate if you apply for a loan again later on down the road.
The rules for when you apply for a loan for college tuition are a little different. Some student loans are given out to almost anyone who needs one, but remember these are not gifts. They will have to be repaid. If you pay them back on time, you are doing your credit a world of good. There are some loans you can’t get, however, and when you apply for a loan over and above what you already have, they may deny you. This is when parents can take out a loan for you, but they must have decent credit to do this as well.
If you just need to apply for a loan to pay your current bills, be careful about who you go to and what the terms of the loan may be. Be wary of ‘payday’ loans that are often offered to those with poor credit. These places offer to loan you money until you get your next paycheck. Be very careful here. The interest rates on these loans are horribly high, and in the end, it is not worth it, and it only serves to put you further behind and further into debt. These can lead to a habit or borrowing and repaying, and that has a high price tag for you. Get your affairs in order without the payday loan if at all possible.