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You have maintained a good credit rating over the years, consider yourself lucky since you won’t have any difficulties in getting a personal loan. But if your credit history has been damaged and your credit score is poor, it can be very challenging to obtain a loan.
Tips on Getting a Personal Loan When You Have Poor Credit
If you cannot do something to repair your credit before getting a loan, a feasible option is to work with an online lender who offers poor credit loans. The good thing about online lenders is that they process loans fast so don’t need to wait for weeks for a decision.
Here are some things you can do to improve the likelihood of loan approval:
Online lenders catering to borrowers with poor credit are likely to focus on your monthly income. They will assess whether you can afford a loan, so be sure to include all sources of income, whether from employment or benefits.
One way to ensure the approval of your loan is to assign a guarantor for your loan. The guarantor can be anyone with good credit. It is important to discuss the responsibilities to the guarantor since he or she will be obliged to take over the debt if you fail to pay your loan.
Lenders appreciate honesty so ensure that all the information you supply in your application form is true. Providing half-truths in your application form will surely get your loan application thrown in the trash bin. Online lenders will be willing to work out something for you based on your current situation.
While nobody likes being judged, you are definitely going to be when you take out a loan. Creditors will look closely into your credit history and decide whether you are worth the risk lending money to or not. This is why if you have a credit score that is less favourable, there is a high chance that lenders will outright reject you. Not all though. Below are ways on how you can get a loan with bad credit.
Why Bad Credit Loans?
There are loans that people with less than ideal credit reports can take advantage of. Also referred to as bad credit loans, they are also ideal for those with little to no credit history. Typically, loans like these come with greater restrictions and even higher interest rates. But lenders had to put these safeguards in order to reduce the risks of borrowers not paying them back.
Reasons why your credit is bad
Having a bad credit means companies are viewing your credit history negatively. As a result, it becomes difficult for you to access certain services or borrow money. There are a number of things that can have a negative influence on your credit score such as defaults, late payments, bankruptcies little to no credit history, you’ve never opened an account before or you’ve never taken credit in the past. Still, different companies have different criteria when assessing credit history and others may see you in a more positive light than others.
Building your credit With Unemployed loans
While you can still get a loan even when you have a bad credit, it will likely cost you more in terms of fees and other charges. Just because you have a low credit score now does not mean that it will remain that way forever. Some of the things you can do to build it is to ensure that you pay your bills on a timely manner, keep your lines of credit open, avoid using more than 30% of your credit limit, pay off your debt, or consider debt consolidation.
Refer to personal instalment lenders
When there are emergencies and you have no time to build your credit, you’ll need the funds as soon as possible. Personal instalment lenders can be a good alternative as they do not just look into your credit score but several other factors when deciding whether you should be granted a loan or not.
Consider a short term Unemployed loan
Another way for borrowers with bad credit to be more appealing when taking out a loan is to go for a secured one. This is where a borrower presents an asset such as a car or a property to guarantee the loan. Lenders are likely to approve this loan since the collateral can help cover the losses in the event that you will default. however, the loan amount will be dependent on the value of the security.