A credit score is one of the most essential factors that a lender considers when evaluating a person’s creditworthiness. A credit score of 750 or higher is regarded as good and can help you secure personal loans quickly. Maintaining a decent credit score, on the other hand, is difficult for many people since it necessitates discipline, money management skills, and, most crucially, sufficient cash flow to pay off debts on time.
However, did you know that even if you have a bad credit score, you can acquire a personal loan? Yes, even if you have a bad credit history, you can still acquire a loan. Before you continue reading, keep in mind that raising your credit score is always a good idea in order to acquire better credit terms on future personal loans. Only use the methods listed here in an emergency where you have no other choice but to borrow.
So, here are five strategies to acquire a personal loan even if you have bad credit.
Extend your loan search horizons.
Credit score cut-offs used to evaluate loan applications can differ between lenders. When reviewing loan applications, some lenders impose a high credit score cut-off, while others may approve loans to those with a lower credit score but higher interest rates.
Secured loans are the best option.
Secured loans are available to those who have been denied unsecured loans such as personal loans and credit card loans, or who are being charged exceptionally high interest rates due to their low credit scores. As a result, lenders place less emphasis on credit scores when approving secured loan applications.
Make an application for a shared loan or a guarantor.
A shared loan is another option for acquiring a loan despite a bad credit score. One can apply for a loan here by partnering with someone with a strong credit score (spouse or family member). As the other member acts as a co-applicant with the borrower with the low credit score, the chances of having loans approved increase.
Take out a loan from a non-banking financial institution (NBFI) or a peer-to-peer lending platform.
It can lower your credit score since banks undertake thorough credit report audits, which can occasionally lead to hard inquiries. As a result, you should seek non-banking financial firms (NBFCs) rather than banks, as NBFCs have more lenient attitudes toward those with bad or no credit. The drawback is that, in comparison to banks, these institutions charge substantially higher interest rates.
Consider taking out a lesser loan.
If you don’t have strong credit, you can take out a small loan, such as a personal loan, and repay it on a regular basis to improve your credit score. This method allows you to progressively improve your creditworthiness and eventually apply for a larger loan from a bank or other financial organisation.
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