Bad Credit Score? Improve Your Chances of Getting A Loan With Bad Credit

improve your bad credit rating
improve your bad credit rating

Is your bad credit score making it difficult for you to get a loan? Poor credit history is more common than you might think. Borrowing options can be limited and the cost of the loan can incur greater costs to you. But…it’s important to remember that a poor credit score is not the end of the line when searching for loans. The first thing you can do is search for bad credit loans. Otherwise, read on as we uncover some tips. There are innovative ways to increase your chances of getting a loan with bad credit.

Consider using security or collateral

Assets, such as a boat, car, land or even a house may be advantageous when applying for your loan as these offer the lender some reassurance. The amount of the loan will depend upon the equity or value you have in assets. You do need to consider that if you default on your payments, this may result in the repossession of your property or assets to recover the cost of the loan.

Look beyond the obvious loan providers

Unlike most lenders, credit unions are more inclined to look beyond the credit score, give you a fresh start and lend money. Their focus is on the person as an individual, not just the numbers. Do bear in mind however that they will not invest in a borrower who can’t service the loan. A credit union is still looking to make a profit, despite being compassionate in lending rules. Credit unions still have set criteria to approve a bad credit loan.

Show consistent savings habits

You don’t need to have a massive bank balance to show you are stable financially and on the right track to rebuilding or improving your credit history. Present your savings account, showing a solid pattern of savings. Showing that you will be organised and methodical moving forward with your loan payments is vital. Lenders are reassured when you have funds to draw from should you find yourself temporarily short of income or cash flow. If lenders can see healthy saving habits then your chances of getting a loan with bad credit will be higher.

Have someone with good credit to co-sign the agreement

Having a guarantor is one of the simplest ways to immediately increase your chances of obtaining loan approval. This person needs to have a positive credit score and a consistent income. The most common people to co-sign loan agreements are family members, relatives and very close friends. These people need to understand the risks of co-signing a loan and trust you will not default. If you do, this may affect their finances and future credit score. If you default on the loan this person will be in the unfortunate position of having to pay the loan amount. You need to be 100% committed to paying the loan and have the income to service the loan. You won’t want to compromise the relationship.

Do what you can to fix your credit score

Firstly check out your credit to ensure there are no errors that are affecting your score. If there are, you may be able to fix your credit. You may find older bills that have since been settled and can be removed. Other factors can include delinquencies or loans that you may not have incurred. Credit rating agencies can make mistakes but are always open to correcting these errors.

For more answers to your financial questions, check out our FAQ page. Or enquire now, through our online form.

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on pinterest
Pinterest

Related Posts

personal loans with no credit check
No Credit Check Loans
Jack Richings

Personal Loans With No Credit Check

Personal loans are a great cash injection. Do you want a quick & easy option with no impact on your credit score? Consider personal loans with no credit check.

Read More
Australian Economy 2020
News
Jack Richings

Australian Economy 2020

Bush fires, drought, flooding & the Covid pandemic have made 2020 a year to never be forgotten. But how has this affected the Australian Economy 2020? Find out.

Read More
what is debt management
Debt Management
Diane Challis

What Is Debt Management?

Ultimate Debt Management Guide – We discuss the difference between good vs bad debt & give tips on how to escape debt. Find out what is debt management here…

Read More