Do you know someone who liked to be judged? I guess your answer is no. But when it comes to financial matters, we will always be judged, favorably, or unfavorably. Imagine being judged ineligible for a loan! How does that feel?
From experience, I can tell you it is such a bad feeling to be considered ineligible for funding. But if you acknowledge the industry works, this may never happen to you. Lenders cannot approve loans to everyone. They must judge and only lend to the most appropriate applicants. These are individuals the lenders believe they will repay it in full amount and in good time to enable them profit and remain in business.
One of the main criteria of a private lender used to determine eligibility is a history of your financial ratings, for more details check out instantloan.sg then you can assess their rates. Good financial history is built over time. Borrowing and repaying early is a practice that builds good track. If you have a good history, your score is relatively higher.
You can easily qualify to borrow money at lower rates and on better terms. What if you have bad credit standing? You may have problems qualifying for it from traditional lenders. But we all start at point zero when it comes to this. One may have bad history because he or she has never borrowed before. Still, it could be due to such things as late and missed payments.
Can you get a Loan with Bad Credit?
This one question has been asked so many times and will continue to be asked. Well, the answer is – you can get even a large sum with bad financial history. How? In this section, we are going to consider how you can qualify to borrow money with bad standing. And we start right away.
Generally, the score range between 300 and 850. Most lenders require borrowers to have a minimum score of 700. Nevertheless, a bad credit begins from 650 downwards, though the meaning of bad and good may be different depending on lenders. How then do you get approved with bad standing?
Well, if it is not an emergency, the best way to go about this situation is to work on improving your score. By doing so, you will be able to afford the exact amount that you desire. As we mentioned at the outset, that it is built over time. You cannot sleep and wake up in the morning with good credit.
However, you can do that with ease. Begin by paying your bills once they fall due. Timely payments are so important, especially if you are using credit cards. Try to lessen the balance on the cards to at most 30% of the acceptable limit and do not go for new credit. To summarize what we have discussed, the following three aspects will help you qualify for a loan if you have bad credit:
- Timely payment
- Low credit utilization
- Avoiding new credit.
These factors often account for at least 75% of your overall score. If you work on these three factors, you may end up improving your score even by 100 points within six months. What do you think? Is it had to work on them? I don’t think so. A large amount of money requires earlier preparation. Perhaps you have been thinking of a project to finance for a while. To improve your score by considering these three factors, and you will stand a high chance of securing it.
Nonetheless, we mentioned that the above approach works best when you are not faced with an emergency. What if you need to finance an emergency now? This means you do not have time to improve your score. You can still qualify for it.
Well, your applications may have been denied for different reasons. It could be due to poor financial history or just a newbie like who have never applied before. Ask for a personal talk with a loan officer and prove your creditworthiness. If you get the chance of having the interview, have all the relevant documents that will help convince them you are creditworthy individuals. What is more, lenders like stability, and this is so important. Prove to them that you have occupied the same home for years and that you have maintained the same job for a long time, you will improve your chances.
The Best Alternatives
If you are approved for a sum of money with bad credit, you are likely to have a high-interest rate. Different have different requirements and terms. There are those you can qualify for, and there are some that will be out of reach. With bad credit, consider the following:
- Secured loans. These are the best for individuals with bad payment history in these arrangements, borrowers are required to offer assets as security for the amount that they have borrowed. Lenders are more likely to approve your application because the risks of loss are less compared to unsecured ones. If you default, the lenders can take possession of the asset. Make sure to compare loans online.
- Credit unions. These are lenders just like others. Nevertheless, your application is not examined strictly. Their goal is not to profit but rather to improve the welfare of applicants. The challenge now is that you must be a member to qualify.
- Consider equipment financing. What do you want to do with the funds? If you intend to purchase costly equipment, consider equipment. You can easily qualify for the loan because the asset itself serves as collateral.
- You can qualify for a large loan even with bad credit. I this blog, we have discussed various avenues you can use. There is still one option left if all the approaches we have discussed are not appealing to you. Look for a co-signer and his or her credit score will be used to even in the calculation of the interest rates. With a co-signer, you can qualify for any loan.