How to get a Personal Loan with Bad Credit
when it comes to borrowing a loan, credit scores matter the most. a credit score below 700 can be detrimental to your chances of borrowing a loan. however, this need not be a hurdle if you need to apply for a loan in an emergency.
here are 4 ways you can get a personal loan despite the bad credit:
the first thing you should do if you have a bad credit score is to get your hands on your credit report. the report will give you all the information you need about your current outstanding debt, what’s going wrong, and what can be done to enhance your credit score. you may want to pay off a long-standing loan that may be a problem to your potential lender before you apply. further, you may also want to lower your debt to bring your debt/income ratio (generally less than 0.5) to acceptable levels, which can raise your chances of getting a personal loan.
prepare to reduce your existing debt. use all the tools at your disposal, such as an emi calculator, to determine the loan emi you need to repay. ensure that you stick to the repayment plan throughout your loan tenure. remember, most lenders keep a record of your repayment patterns, and every time you stick to regular payments, it is a plus to your credit score.
while a bad credit score may often result in relatively higher rates, several platforms can help you compare the emi rate so you can get the best deal. many of these platforms also offer loans to those with low credit scores. you may want to opt for reputed lenders who set a reasonable upper limit to the emi rate. another advantage of online lending portals is that they allow you to check if you qualify with a soft credit check. you can thus calculate your emi rate and loan emi without the exercise affecting your credit score.
if you must borrow the money immediately, consider looking for a secured loan that requires you to pledge some collateral. this could be a deposit in your bank or even a vehicle. you may even consider bringing in a co-signer for your loan application. the co-signer could be a family member or a friend who must have a good credit score. however, bear in mind that if you fail to repay the loan, your collateral will be seized in case of a secured loan, and your co-signer will be required to repay the loan in case you are taking that route.
you see, applying for a personal loan even with a bad credit score is not impossible. however, it is always ideal to keep your credit score sparkling to avail yourself of a better emi rate and quick access to credit.