If you’re worried about your bad credit rating, do not panic! Whilst a low or bad credit rating might make it more difficult to get a loan, it is not impossible! Read our tips below to find out how you can maximise your chances of getting a bad credit loan even with bad credit!
What is a Bad Credit score?
Before we go on to explain how you can still get a loan even with bad credit, it’s important to understand how lenders look at individual credit scores and also help you understand WHY you would have bad credit rating in the first place.
Generally, people with bad credit tend to fall into one of 2 categories: those that have had loans or credit in the past and due to financial difficulties or other unforeseen circumstances were unable to meet their debt obligations. Not paying existing credit accounts is one of the main reasons people have a bad credit score which could mean that new lenders might not be able to get you the credit you’re looking for.
The second criteria are people that have not had any credit before and this there’s no info on their profile against which to judge their credit rating. Whilst frustrating, this is normally a much easier problem, as you can build your credit rating by taking out small credit products – such as a cellphone contract, credit card or credit facility at your favourite store – and ensuring you pay off any monthly payments quickly.
Getting a Bad Credit Loan – Understand Where you stand
As a first step, you should request your credit report which you can easily obtain from a number of online resources (there may be a small once off fee). You should then carefully review any negative marks on your file and ensure that the data is accurate and up-to-date. If there are any errors, you should reach out to the credit provider and work out a way to resolve the dispute.
Once you’ve reveived your credit report to understadn why your credit is poor, it also helps to understand HOW bad of a credit rating you have – the term “bad credit” somewhat relatived and indivdual shortterm loan companies apply different criteria to their bad credit loan review. That means that you should apply to multiple lenders to give yourself the best chance of getting approved.
However TAKE NOTE: whilst it is absolutely possible to get a loan with bad credit, it should be considered very carefully. Because of your bad credit rating, lenders will see you as higher risk, which means the rates will be much higher than for the same loan amount with good credit. In addition, loan sharks will prey on desperate individuals that urgently need a bad credit loan, with high punitive charges and extremely inflated rates.
As such, our advice is always to make sure you have explored all options before applying for a high risk bad credit short term loan. The most immediate option is to reach out to friends & family – whilst it might be a hit to your ego to ask for money from the ones close to you, the long term impact of a badly chosen loan with demanding terms can be much worse.
I still need to go ahead – how do I apply for a Bad Credit Loan?
If you’re still eager to proceed, then the bad credit oan application process is very similar to that of any other online loan application. To ensure you don’t waste time applying to lenders that require a good credit rating, we have listed only short term loan providers that have a more flexible selection cirteria when considering bad credit loans.
That being said, you may have to apply to multiple lenders before you get a successful loan application. Some of our bad credit loan providers listed above provide additional financial coaching to help you escape teh debt trap, so please review each individual loan proposal carefully. On the flip side, ensure you have a full understanding of how much the bad credit loan will cost you – including any fees, charges and interest rates – to make sure you can afford to repay the full amount when it’s due.
If you’re unsuccsessfull applying for a bad credit loan, you could try and apply for a secured loan. This is only applicable if you have an asset that you own that you could put up as collateral. This acts as a guarantee to any bad credit loan provider in case you should be unable to repay your loan amount in full. us.
Requirements for a bad credit loan
Similar to any other online loan application, applying for a bad credit loan requires:
- that you are NOT under debt review, administration or sequestration
- your loan application will be subject to a Credit Check, and Affordability assessment as required by the NCR (National Credit Regulator)
- you need to be over the age of 21 and under the age of 60
- you need to be permanently employed for at least 6 consecutive months with the same company
- all loan applications are subject to employment confirmation (in most cases self employed applicants will face additional checks and in some cases may not be eligible)
- you must have a valid South African bank account in your name
How to improve your bad credit rating
Your best chances of getting a bad credit loan are not to have bad credit in the first place. Whilt this may not be realistic fo revery occasion, depending on your situation it may make sense to invest a few months in rebuilding your credit score before applying for any short term credit.
The potential savings in better rates and reduced charges will make it more than worthwhile!
Final Thoughts: Make sure you have explored all other options before comitting to a bad credit loan and make sure you FULLY understand all fine print, terms and conditions and related charges when applying for a bad credit loan. Never underestimate the risk and don’t be afraid to walk away and evaluate alternative solutions.
Companies like CYBERFINANCE can help you structure your debt obligations and build a debt-free life.