CAN I GET A BAD CREDIT LOAN?
Bad credit loans are personal loans for people with poor credit. A lot of people think they have no choice but to choose high-cost lenders if they have a poor credit score, but that is not true. There are low-cost lenders like Loansmart that want to help people get in a better financial position. If you’re wondering “how can I get a personal loan with bad credit?” – this blog is for you!
What’s the best way to get a bad credit loan?
- Choose a lender that is more likely to approve your loan and is low cost. It’s tempting to apply to every loan company, thinking you’ll have more chances of success, but every decline and credit check hurts your score.
- Read online loan reviews to see what other people have to say about the loan company you’re applying to first. Make sure you choose a company that has lots of positive reviews and has been in business for a long time.
- Try to keep your expenses under control for three months. When you apply for a loan, your bank statements are forensically analysed! You’ll have a better chance of getting your loan approved if you avoid discretionary spending. Avoid buy-now and pay later, cancel your streaming subscription, don’t go out for takeaways, drinks, or a night out. Stay away from casinos and don’t buy lottery tickets. Do everything you can to demonstrate you can afford your loan.
What is a bad credit debt consolidation loan?
Choose a bad credit debt consolidation loan if you already have loans. You can and ask for extra cash at the same time. By consolidating lots of high cost, short term loans and spreading them out over a longer period of time, you’ll make loan repayments more affordable.
All your existing loans will be repaid which will help improve your credit score. With more affordable loan repayments, you’ll meet your payments of time and improve your credit score!
What is bad credit?
Your credit score is a personal rating that indicates how well you handle money. Lenders take this information into consideration when you apply for any type of lending, including personal loans and mortgages.
Credit scores are measured on a scale of 0 – 1000. The higher the number, the better your credit score. Anything above 500 is considered ‘good’, and anything below 300 ‘bad’. According to Canstar, most people have a credit score between 650 – 768 (above average). Bad credit can negatively affect your ability to get a loan, as well as the interest and fees you will pay on it. Be sure to check out our Ultimate Guide To Improving Your Credit Score
How do I know if I have bad credit?
Most New Zealanders are unsure of their current credit rating, so don’t despair if you’re in the dark about your credit profile. Credit reports are free, but if you want one quickly then you will have to pay.
There are three credit reporting companies in New Zealand. You can get a copy of your credit report, any one of them.
How do I dispute something on my credit report?
Occasionally, inaccurate or incomplete information finds its way into your credit report. This could unnecessarily hurt your chances of getting approved for a personal loan or securing a lower interest rate.
Even if you do have a bad credit history, you should check your credit report for incorrect information, such as:
- Credit applications you never made
- Payment defaults you were unaware of
- Credit enquiries that have not been approved
It is possible to correct information in your credit report. Go back to the company that provided you with the credit report and tell them. You’ll be asked to provide evidence to support your claim. You should provide a written explanation for what you believe is wrong, including documents supporting your claim. Loansmart provides 7 Tips For Improving Your Credit Score.
Can you fix bad credit?
Yes. The good news is that your credit score isn’t forever. Most of your credit history gets cleared every five years. That means if you had financial troubles five years ago and couldn’t afford to pay your bills on time, but are better now, the chances are your credit score will have improved.
How can I fix my really bad credit?
You can improve your credit score by understanding what causes credit scores to drop. Credit scores can be affected by a lot of things, but the most common are not paying your bills on time, missing loan payments, and applying for too many loans. It’s easy to fall into these habits when you’re under financial stress, but you can bounce back from it.
- Pay your bills on time. Are you late paying your power, internet or phone bills? A few days late here and there can hurt your credit score.
- Limit the number of loans you apply for. When you apply for a loan, your credit is checked and kept on file. Too many loans can mean you’re taking on more credit than you can handle.
- Don’t share bills. If the other party doesn’t pay the bill, your credit is impacted too. It’s better to split bills entirely e.g. I’ll pay the power if you pay the internet and bond.
- Avoid buy-now, pay-later. Even if it’s interest-free, it’s also debt. If you miss a payment, that will leave a black mark on your credit rating. If you do use it, make only one buy-now, pay later purchase at a time.
- Avoid being a guarantor. That good deed could cost you dearly. If the person whose loan you’re guaranteeing doesn’t mee their payments, you’re liable for covering the costs and this will impact your credit score.
- Think about a bad credit debt consolidation loan if you can’t make your payments on time. Taking out a low-cost loan with a longer repayment period can make your payments more affordable. With more affordable loan repayments, you’ll meet your payments on time and improve your credit score! All your existing loans will be repaid which will help improve your credit score.
- Choose your lender carefully. It’s so easy to apply for online loans, but that’s the problem. It’s tempting to apply to every loan company, thinking you’ll have more chances of success, but every decline and credit check hurts your score. Read online loan reviews to see what other people have to say about the loan company you’re applying to first. Make sure you choose a company that has lots of positive reviews, and has been in business for a long time.
What causes a bad credit score
Many factors can hurt your credit score and cause you to fall below 300, which is considered bad.
A few days of missed bills can mean the difference between having good or bad credit. For this reason, many people are unaware they have bad credit. Many think a few days late here and there wouldn’t make a difference, but it does!
Loan defaults can cause your credit score to dive substantially. If you have defaulted on a personal loan or multiple loans before you will most likely have a poor credit rating. Unfortunately, if you have acted as a guarantor for someone who has defaulted on a loan and failed to meet their repayments your credit score will also be affected.
If you are young, your credit score will likely be low. But that’s not your fault. You haven’t done anything wrong financially, you just haven’t had enough time to build up a credit history.
A loan application will affect your credit score, so it is important to limit them. While applying for the odd loan application won’t have much of an effect on your credit score, multiple loan applications and rejections in a short period of time will. This usually indicates that you are applying for more credit than you can repay and acting financially irresponsible.