If you’ve had loans or credit cards in the past and have struggled to make payments, or you’ve even been late with utility bills, this can all adversely affect your credit score (credit rating). If you are not looking to get a loan it won’t hamper your life, but if ever you do decide to apply for finance again, your credit score is going to come into serious consideration.
A poor credit score can lead to your application for finance being rejected. Best case scenario is you may still get approved, but it could be a longer process requiring extra supporting documentation.
Getting a personal loan with a poor credit score is still possible though, and there are some other finance options available to you as well. Let’s look at some possibilities and some handy tips.
You Might Have More Chance When Applying For a Credit Card
If you apply for a credit card with a very low credit limit, despite not having a perfect credit record, you still could get the card application approved if the credit limit amount is considered low-risk.
When finance companies and banks make decisions on any form of finance, they need to assess the risk factor involved in approving finance. The lower the risk, the more chance of approval. So, despite a less than perfect credit record, it’s still possible to obtain a credit card if the risk for the financier is low.
Work Towards Improving Your Credit Score
Your credit score can improve over time and there are several ways you can help make that happen. The obvious one is to always make sure you pay your bills on time. Set up direct debits if you think you’re likely to forget paying a bill.
If you do already have a credit card or a loan, start paying more than the minimum repayment, as this will help speed up the process of improving your credit history. If you can completely pay off a loan or credit card, then even better.
Another thing you can do is ask for a lower credit limit on an existing credit card, as even unused funds are considered debt.
Once your credit score has improved, then you’ll have a better chance of having a loan application approved should you need to borrow money or apply for credit.
Talk To a Financial Advisor
Meeting with your accountant or a qualified and experienced financial advisor may give you some options. For starters, they can advise you on how to improve your credit score, or come up with some ideas of where you might have the best chance to obtain finance.
Alternatively, your accountant or advisor can help put together a financial plan where you may find you don’t need to borrow money after all. It might take longer to accumulate the money you need, but if you don’t have to borrow, you won’t be needing to make repayments or pay extra in interest.
Enlist the Help Of a Finance Broker
A finance broker works on your behalf to shop around for a loan that suits your needs. Brokers have developed relationships with the banks and decision-makers, so there is a better chance of getting a loan application approved if a finance broker is negotiating the deal for you.
The downside is that brokers will either charge a fee for their services, or be paid trailing commissions for the lifetime of your loan. Still, even if the cost is a little higher, a broker might be able to broker a loan deal for you despite you having a poor credit score.
Private Lender Personal Loans
Possibly the best way to get a loan with bad credit is to approach a private lender. Private lenders specialise in loans for people with bad credit history by offering low-risk, small personal loans with short repayment terms.
As mentioned earlier, the lower the risk the lender faces when loaning money, the less impact an imperfect credit record will likely have on the decision to approve finance.
At Cashify Loans we offer a number of personal loan options, with borrowing amounts starting at as little as $500. Give us a call to discuss your options.
Disclaimer: Please note this content is of general nature only and does not take into account your personal objectives, financial situations or needs. For advice tailored to your financial situation, it is advised that you seek guidance from an accountant or financial advisor. The information contained in this article is correct at the date of publication.