Can bad credit and borrowing happen side by side? A straightforward answer is not available for this. Whether or not possible, it largely depends on your current financial situation.
It is a quintessential fact that the lower your score is, the lender will see greater risk in lending you money. Credit scores ranging from 300 to 579 refer to the bad credit spot.
The loan provider will prefer levying high interest to compensate for lower scores. However, it is not the case with every lender. This rule also has an exception.
In a typical scenario, Mr Kevin was looking forward to getting loans to overcome financial problems happening because of bad credit. He wants to borrow an amount of €5000 with duration of 5 years for repayment. After rounding up, the overall cost, which includes the principal amount and interest, comes out as €6523.
After negotiating with different lenders, he ended up with the above offer. A slight difference in the interest percentage lets him save € 370 to € 1000 amount. He finalised the deal after drawing a comparison carefully.
The extent of the saving will depend on the lender you have approached. It also depends on the interest rate you are getting. This example must have been able to give you a fair idea of how shopping around for the best rates is a good practice, especially when you have bad credit scores.
For more such revelations, stay here and keep reading this blog.
Is there anything you still do not know about bad credit loans?
Yes, there can be many aspects still unknown to you. To validate what you know and do not know, you must check the points below. They are a compilation of beliefs created around these loans.
1. The loan acceptance rate is not high
One of the astounding facts about these loans is that the borrower can enhance the chances of approval. How? They will have to work on their credit profile to enjoy having bad credit loans on guaranteed approval.
There is no rocket science behind this fact. It works on the simple principle that the borrower should have a stable financial condition in current times. They should be cautious about taking the necessary steps to upgrade credit scores.
2. Affordability is the low-key factor
Do you find it difficult to believe? You will contradict if you go by the traditional belief that low scores lead to straightaway rejection.
However, with the emergence of online lending provisions, poor creditors also have positive chances. Here, the concerning factor for lenders would be the borrower’s present financial capacity.
They should establish a stable financial stature by showing on-time payments of bills. Besides, they opt for an affordable amount of loan. It is because a higher amount would be difficult for them to cover.
Affordability depends on these realistic aspects and has nothing to do with credit scores. Therefore, having low credit scores cannot hinder your borrowing expedition. You are good to go by proving your financial potential to the lender.
3. Location freedom is not accessible
Do you know you can apply for loans from Dublin also? These loans need an online request from your end. No bank visits will be necessary, as you can fill out the loan application online.
Have the essential residency details to prove your eligibility. Your age should not be less than 18 years at the time of applying. Essential criteria like these are critical for you to fulfil.
Failing to do so can result in rejection from the lender. Be careful about the lending requirements. Skipping it would be dangerous, or else you will have to let go of this loan opportunity.
4. Wide variety of options not available
Do not believe if someone says that bad credit people get limited options! It totally depends on the lender who you will approach. You can ask them about the interest rate of other loan options that accept poor scores.
Compare rates carefully to decide which option to pick up finally. Obtain cash advances, student loans, unsecured loans and even speedy loans despite having poor credit scores.
Your chances of getting approval are great unless you struggle to prove your affordability. There will be no problem if the lender is convinced of this factor.
5. Recovering scores is not possible with loans
Re-assure yourself about getting back good credit scores. These loans can make it possible for you. How? Successful repayment within a specified duration is one of the ways to achieve it.
Therefore, your first priority before borrowing would be validating your financial capability. Check if you can save enough money to arrange for loan payments. For that, you will have to cut back some payouts.
Assess your monthly budget to figure out if any gaps are available. If not, try to look for avenues where you can eliminate some outgoings from your budget for the time being.
Once you are able to make sure about arranging money for repayment, there is no looking back. Practise this same step to save some amount of money every month to cover spare expenses. This way, you will not have to depend on loans during a financial crisis.
6. Fetching money from personal connections is not possible
Did anyone tell you that you should not ask for financial help from your friends and family? They might be trying to guide you in the wrong direction. You can seek help from your near and dear ones without worrying about your credit scores.
They will not judge you based on your credit scores. Above all, convincing them is a lot easier than convincing a lender. In addition, you will not have to borrow money on stricter terms and conditions.
However, be alert when it comes to repayment, or else this money affair can ruin your personal connections.
The bottom line
Poor credit scores are a practical problem that many people are coping with. Low income, compared to high living costs, can trigger such problems. The best way to deal with it would be to be mindful of your outgoings. If possible, try to amplify your income also.
Caleb works as a senior content writer at Financealoan for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
