There are times when you instantly need access to money, but the urgency is hindered by your bad credit. Have you ever experienced this kind of situation when you couldn’t secure a loan due to negative information on your record?
If you have once fall into this situation or you are in it right now, then this article is for you. It will take you through the journey of how to find a personal loan even with Bad Credit.
What is a Bad Credit?
Bad Credit is a situation whereby an individual has a record of failure to pay bills on time. The untimely payment makes the person vulnerable to likelihood of not going to make timely payments in the future. Bad credit normally shows on payment history on an individual or company’s credit card or record.
Any one who has a bad credit has little or no chance of being borrowed money. The lender would assume that the person may not pay up the debt as of the time stated. Bad credit can also be due to a lot of debt on an individual or company’s credit card. It is measured in score with bad credit being under 580 on a scale of 300 – 850.
A credit score is a guide to creditworthiness of the borrower and is calculated by the information on a credit card. The information includes how much an individual is owning and whether or not they pay their bills on time. In the United States of America, the common credit score is placed on a scale known as the FICO score. The FICO score comprises of five major elements, namely;
35% – Payment history: This depicts the number of times the individual pays their bills. The more delinquent he payment history is, the worse it is considered.
30% – Total amount an individual owes: This element includes the credit card balances, mortgages, car loans, any outstanding bills, court judgement, and any other debts.
15% – Length of a person’s credit history: It states whether or not the person is an active account owner who has been making transactions.
10% – Mix of credit types: It includes mortgages, car loans, and credit loans. It combines all kind of credit type and place it on ana average.
10% – New credit: It shows what credit type the individual has recently opted for.
How to secure Personal Loan for Bad Credit?
For the reasons stated above and others, your credit score may fall below the required score which make it impossible for you to secure a loan. How then do you go about it when you need a loan for your upkeep?
Personal loan is a very good way to settle emergency expenses and consolidate debt. But the only have the lender’s trust is to have good credit score. Now, you lack this, you need to follow the following steps to get a loan secured amidst your bad credit.
1. Check your credit score and credit reports
2. Shop around
3. Try many banks and lender but have it in mind that a bad credit score comes with a high interest rate.
Knowing your credit score can give you an idea of the rates you can expect and how much you will be paying each month on your personal loan. Online lenders, peer-to-peer lending, and banks are great options for finding the right loan.
Try to check out the brick-and-mortars banks and credit unions also. Your bad credit score and the urge to get a loan secured shouldn’t drive you to the hand of scammers. You should be careful and make sure that you are getting a loan from a reputable company.