HAVING a bad credit rating can make it difficult to get a loan, giving the borrower fewer options, and the loans are usually more expensive.
Credit history has a direct effect on whether a loan is granted, it also effects the amount of interest a lender will charge.
Lenders will review an applicant’s credit history to assess the likelihood of a successful repayment, and check whether they think the borrower is a good risk and expected to repay the loan. To have a better chance at getting a loan, a good credit score is needed. See what is available to improve your credit rating before attempting to take out a loan.
The bigger the risk the borrower is to the lender, the greater the restrictions will be. However, its important to know that credit history isn’t all that will be considered when a provider decides to lend the borrower money. What will also be taken in to account is the persons salary, profession, stability and any other assets you may have, such as property.
Here are a few tips:
1. Find out your credit score
The more information the better going in to any transaction. This way, information will be better evaluated before you even start to find a lender.
2. Look to conventional lenders
A conventional lender might give a person with a low credit a high interest rate compared to a person with good credit, they will be most likely to lend to applicants looking for loans for bad credit. The interest rates will vary with different lenders.
3. Look for low APR over the shortest term
Having a lengthy loan may seem tempting as it will reduce monthly repayments, but this can cause payments to be more expensive in the end. Make a note to look for low APR over a short term.
A loan is possible when your credit is bad. As a borrower, it is important to make smart choices on the path to rebuilding your credit. It can be a bit overwhelming, but doing some planning can help you get the money that you need and gain control of your finances.