It’s no longer impossible to secure a huge amount of bad credit. Despite the fact that lenders view people with bad credit as high risk borrowers, specialised lenders will agree to the deal as long as you submit the right application. In fact, not all lenders look at the credit score at its face value. Some lenders may actually refuse someone with a high credit rating due to failure of meeting other lending requirements.

It is a new niche market

Lending has changed since the big bank tightened their rules around lending. A bad credit lending institution will grant some loans despite a low credit score as long as the loan applicants are willing to improve their scores. If you are unable to secure affordable loans from mainstream lenders, you may still be able to access funds from a specialised lender if you meet their criteria.

Bad credit loans backed up by collateral will increase your chances of getting a larger loan

The presence of collateral reduces the risk for the lender; should you default on the loan the lender will be able to use the collateral as reimbursement.

The key is to offer collateral that matches the value of the amount you would like to borrow

There’s a huge difference in offering $2000 worth of collateral for a $30,000 bad credit loan. The value of the attached asset must be equivalent or higher than the loan it secures.

Income outweighs a poor credit score

While it is not easy to get approval for unsecured loans, lenders will look favorably on applications with proof of substantial income as it validates your financial capacity to repay the loan. Mainstream lenders usually require tax returns, payslips, account records and other forms of documentation to verify proof of income.

What if I can’t prove my income?

Specialised lenders like Australian Lending Centre use other means to verifying your credit rating and capacity to repay the loan. This means you can still obtain a loan despite the absence of some documents required by traditional lenders.

Cosigners assure lenders that no matter what happens, the monthly repayments will be made

If you cannot offer collateral equivalent to the value of your loan, you can look for a cosigner who will then be considered as your security option. Consigners guarantee lenders they will receive the loan repayments on time. If you were to default on your loan your cosigner will fulfill your debt obligation on your behalf.

But, there’s a catch – your cosigners must have excellent credit history. They must prove that their income is substantial enough to cover your repayments if you fail to do so.

Online lending has a bad reputation of making people with bad credit vulnerable to fraud. How do I make sure that a bad credit loan is suitable for someone like me who is struggling with debt?

Online lending is a convenient financing platform. A lot of people can easily apply for finance by simply completing an online form that only takes a few minutes to finish. However, it is your responsibility to differentiate a genuine company from a fraud.

First, look into the company profile. A lending firm that does not reveal its address nor gives away company information is a huge red flag. Be careful who you supply information to. Legitimate lenders will ensure the privacy of your personal details by using tight security measures whilst fraudulent firms will most likely use those details for illicit actions.

Second, check the comparison rates. Don’t just focus on the interest rate. Australian companies must always list a comparison rate next to their advertised interest rate. The comparison rate is the true cost of the loan, it factors in the interest rate, fees and other charges that may be associated with the loan.

Thirdly, study your financing options. If your situation is not desperate it is always better to consider your options and take your time when making decisions. Choose the loan that secures your debts and builds your credit at the same time. Additionally, be sure to borrow only through a stable financing company with a good reputation.

Look for a reliable and reputable lender that offers practical solutions to your financing needs. Make sure you only sign with a lender that gives you an affordable interest rate despite your low income and/or sub par credit score. Remember that bad credit loans can help you build a strong financial profile, which will ultimately qualify you for a better future.