Most of us believe that in today’s economic environment it is impossible to arrange bad credit loan. However, this is not true. In reality, the credit crunch has given rise to many different types of loan so that people with poor credit can arrange the finance. The aim of this blog is to give you an insight into what options are available for you, so you choose the best according to your need.
Handling the financial burden that comes with accumulating debt can be a difficult task. But there is always a way to overcome this. For example, getting a single large loan with low credit can be a feasible solution to clear all your critical debt in one go. Even getting an unsecured personal loan with bad credit can bring major relief.
But there is an issue with it. When it comes to taking a loan with an indecent credit score, unsecured ones are the most onerous. Then, how is it possible to get approval without guarantor or collateral for a high amount of loan to soothe monetary pressure? Alright, it is not that challenging actually.
While it is a fact that borrowers can expect to be charged a high rate of interest, still there are options to make the unguaranteed personal loan affordable, and approval more likely. Hence, here are a few points we suggest to increase the chance of getting the green signal from your lender.
What Lenders Actually Care about
It is widely believed that lenders are highly obsessed with your credit score, but this is not the case. We are always informed about our credit record to motivate us to manage our repayments, but lenders are keener in other factors. Therefore, seeking a loan with poor credit can be easy.
Income is one of the factors that the lenders care about. After all, if a borrower doesn’t have any source of income, or at least high income, then he can’t make the repayments on time.
Things to consider
Two kinds of personal loan are available in the market: secured and unsecured. The major difference between the two is the involvement of collateral with a secured loan and no collateral required with an unsecured loan. But which type you chose can have a major influence on the possibility of getting a loan with below standard credit history.
Basically, the chance of approval of the secured loan is more as it is backed up with collateral which can be used as compensation in case the borrower fails to make repayment of the loan. With no collateral to provide, income is the only hope to get approval despite adverse credit. The biggest issue you will face is that you have to pay an unattractive interest rate. Lenders consider the risk involved in giving unsecured loan and will ask a higher rate of interest.
There are other types of loan also available in the market such as Guarantor loan and No Guarantor loan. If someone is ready to guarantee your loan then the task becomes very easy for you even if you have bad credit. But if you don’t have someone to be a guarantor then also you can get the loan despite poor credit. While in bad credit no guarantor loan, the only difference will be the rate of interest and your status of income should be very high.
Enhance your Credit Score
A final issue is to think about your credit score. And whether it can be improved before applying for a loan with downgraded credit. Remember, the score affects your rate of interest that is being charged on the loan, which in turn influence your monthly repayments probability.
Improving your score can help you get the loan at a lower rate, thus making your repayments affordable for you. The only way to increase your score istoclear some of the existing debts. Taking a consolidation loan can help you with this.
Overall, we can say that it is not difficult to get a loan if one has a less-than-perfect credit score and no one to be a co-signer for them. As discussed there are various types of loans available in the market. The best destination to find such types of loan is on the Internet, where online lenders provide loans to borrowers with low credit record.