Getting a Personal Loan When You Have Bad Credit
If you are dealing with a few financial challenges, the last thing you need is another slammed door telling you that you can’t get the help you need. Yet this is an inevitable reality that most loan applicants face these days, especially if they have a bad credit record that keeps them from being approved for any kind of high acceptance rate loan.
It doesn’t have to be this way. Maybe you may have been turned down by numerous banks or lending institutions due to your poor credit rating, but those days are now over. You may actually get the financial help you need when you need it by turning your attention to improving your credit rating.
Here, we break down everything you need to know about bad credit and how improving your credit history can help salvage your credit reputation.
What’s the deal with bad credit histories?
Individuals get a bad credit record when they acquire a poor credit rating. Poor credit ratings happen when someone defaults on loan repayments or misses any kind of utility payments. Late payments can also reflect on your record and leave you with a bad credit score.
The worst part is that a bad credit rating stays on your credit history for a period of five years. This is why it could be challenging to apply and get approved for any kind of personal loan or credit card between those times when your credit history clearly states you are not eligible to even be considered.
How does a bad credit history affect my loan approval?
It could almost be impossible to be approved for a bad credit loan or credit card when you have a history of defaulting payments. The sad part is that this may be something that was out of your control or may not even be your doing.
You could have forgotten about paying a utility bill when you went on a family vacation or was financially troubled at the time that you weren’t able to pay your credit card due. Or, you may have asked someone to pay for that bill but also forgot to do it on time.
It may also be a case of someone stealing your identity and using your resources that may result in a messy financial situation. More often than not, though, it could be a case of high-interest credit card loans that you may have had a hard time paying up for.
No broker loans, what are they? If you want to borrow money, you will either work with a direct lender, or you can use a broker to help introduce you to lenders. A “no broker loan” means you are working directly with a lender.
No matter the reason, a lapse in payment will inevitably reflect on your credit record. When the time comes that you need to apply for a loan to cover some unexpected expenses, your credit history showing that you have defaulted on payments in the past will be the verdict that smashes all your hopes for a loan approval.
This is because banks and traditional lending institutions base their loan assessments on your credit history. If you have a poor credit rating, you will most probably get rejected for a pensioner loan.
Should I really be concerned about my bad credit history?
A blemished credit record is the last thing you need when you want to continue living a normal life. It impacts everything you do in your life.
You may get rejected to rent an apartment or acquire a home or car loan. You may also find it harder to even get approved for a monthly phone plan. Simple yet essential things in your life will be affected when you have bad credit history.
What’s worse is that you get judged for your past lapses if you do get approved for a loan. You may be charged with higher interest rates in case you become a repeat offender on defaulting repayments.
Is there a way to repair my bad credit record?
The good news is that you don’t have to suffer anymore when you have a bad credit history that’s preventing you from getting any financial help or from enjoying life’s simple pleasures. All you need to do is improve your credit history and you’re off to removing that bad record in your name.
Below are some of the things you can do to improve your credit record:
- Take out an unsecured personal loan
Apply for a small personal loan that doesn’t require any asset as security. Make sure to repay your loan dues in a timely manner and this will be seen by other lenders, should you apply for another loan, as a guarantee that you can be trusted for larger loans, such as home or car loans.
- Consolidate your debts
If you have a few small loans, it is best that you pay for all of them immediately. You can opt to consolidate them and apply for a larger loan that can cover all the repayments for these smaller loans.
This way, you will only have to deal with one payment, which you can easily remember to make every payment period. This is also a smart move to lessen the interest rates you have to face.
Refinancing your smaller loans is not for everyone, though. Better talk to a financial expert to know if you are eligible for refinancing scheme.
- Transfer your credit card dues
You may opt to apply for a credit card with a larger credit limit to transfer all your credit card dues to this new card. This way, you will be able to reduce the debt-to-credit ratio.
For example, your current credit card only has a limit of $5,000. If you owe $3,000 on this card, the debt-to-credit ratio is at 60%. If you transfer the amount you owe to a new card with a limit of $10,000, the debt-to-credit ratio will only be at 30%.
- Avoid applying for credit cards that you don’t need
You will only get rejected whenever you apply for a new one, which will reflect on your credit history. Needless to say, this won’t look good on your credit record. It is recommended that you wait until you are certain that you can get approved.
The appropriate timeline for credit card applications on a bad credit is a year or two, given that you have been consistent in paying off your credit card debts for two to three consecutive years.
- Keep in mind to regularly pay your dues
Avoid missing your repayment schedules and start paying off on time. This way, you will be seen by banks and lenders that you are making a solid effort at meeting your financial obligations responsibly.
Can I really apply for a personal even with my bad credit history?
Don’t let a bad credit record ruin your chances of applying and getting approved for a loan. There are reputable lending institutions like Perfect Payday that can take you in and consider you for a personal loan.
Just make sure you’ve done enough research before filing for application. Complete all the requirements needed and keep in mind to have the required documents ready before applying.
Be honest and transparent when dealing with your lender, so you will be able to work out a suitable payment arrangement that your income can afford. Take advantage of their financial expertise, so you may know the kind of loan and payment term that fit your financial status.
It is best that you go to an established lending institution to benefit from their industry experience. Perfect Payday, for example, can help with your financial needs not just by providing you with financial assistance but through their expert advice as well.
Should you be rejected for a personal loan, don’t feel defeated. This doesn’t mean that you will be refused again in the future. In the meantime, work on improving your credit history, be cautious about your spending habits, and make adjustments on where you can reduce your expenses. Make it a point to pay off your debts in a timely manner.
Apply for a no credit check loan with Perfect Payday if you need emergency funding and wish to get a loan with no credit check.
When you make changes in the way you spend and handle money, you will be able to get the financial assistance you need on the exact moment you need it, since you have made considerable efforts to repair and improve your credit history.