Having bad credit is not the ideal situation anyone wants to be in, but for so many reasons some people end up in that situation.
People can have bad credit for various reasons. If you miss payments, max out your credit cards, file for bankruptcy or foreclosure, your credit scores will go down.
Having bad credit should not cause despair, your credit score can be improved long run, but if you need a personal loan right away it may be a little harder.
Although it is possible to be denied a loan, bad credit doesn’t necessarily mean you will be turned down. Some people think that because of their low credit score the only option is to use a high-interest payday or a car title loan because they do not require a credit check.
So, before you go down that route let’s look at how you CAN still apply for a personal loan with bad credit.
Know Your Credit Score
First thing is to know is where you stand. Your credit report has a list of the money you owe and your how you’ve been in paying it off. Your credit score is a calculation of the information on that report which helps lenders see how you’ve managed with that credit. Lenders will look at your credit scores first to gauge how reliable you are as a borrower.
Some lenders have their own limit for credit scores, so if you fall below that, they will do more digging into your credit report to decide whether to give you a loan. Not only that, but different types of loans also have various score requirements. Note that loans for low or bad credit might have higher interest rate and you may be given a lower amount.
Do Your Research
When you are faced with bad credit the best thing to do is do research. Find lenders that will work with people with bad credit, and ask about interest rates, and other factors. There are many reputable lenders who will give you a loan even with bad credit.
Actually, taking out a loan and making payments on time will help improve your credit score.
However, be careful with how many applications you do. Each application submits an inquiry into your credit can lower your credit score. So, do your research prior to applying, so you can be confident that you are getting the best rate and can meet the payment terms.
Rebuild Your Credit
The most recommended thing to do is work toward rebuilding your credit. Learn what the factors are that are used to calculate you score and work to improve them. By rebuilding your credit score, you have a better chance of being approved for a loan and getting a better interest rate.
It can be frustrating to try and get a personal loan when you have bad credit. Don’t despair, all is not lost and there are many options out there to help you get the credit you need.
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