Although you will find advertising from time to time that says ‘no credit loans’ or ‘bad credit loans’ it is important to understand that virtually all loans are credit based (with the exception of some government loans such as student loans). So what does it mean when you see a loan advertised as being ‘no credit’ or ‘bad credit’? Actually, the amount of finance charges or interest will vary depending on your creditworthiness, but your credit score and credit history are still factors. Understandably, the better your credit is the lower your interest rates and finance charges are liable to be.

Most often you will see this type of situation with credit card loans. Interest rates vary tremendously as a result of a borrower’s credit score. One consumer may find a credit card company willing to extend them fixed interest at much less than 10% APR while the next person may pay as high as 29% APR! To say that a loan is not based on credit is only half the story. You may, indeed, get a loan with bad credit, but you will pay more for that loan as well. In order to get good rates it is imperative to rebuild your credit score, then a credit based loan will not be as expensive.