Last Updated on May 20, 2021 by MoneyVisual
Everyone in their life goes through a situation where they need money. And, they don’t have the exact amount!
Layoffs can cost you income, and sudden illnesses or accidents may have disastrous financial consequences, particularly if insurance is insufficient.
In this time period, the personal loan came as a rescue and helps you with the right amount of funds. Even though, the situation becomes difficult when your credit score is bad. At that time, the chances of getting approval of the personal loan reduces.
Additionally, there would be restrictions on the options available for a personal loan. But, here, the good news is that you can have a personal loan with a bad credit score. It does not imply that there is some catch to do it; besides, there is some work that needs to be done. Considering that, here, in this article, we are giving you the five best ways following which you can have your personal loan approved.
Table of Contents
- Bad Credit Score – Explained
- Different Ways to Get Personal Loan Approval with Low Credit
- Wrapping Up
Bad Credit Score – Explained
The Credit Bureau of Singapore is responsible for scoring individuals. The 4-digit score relies on the history of the payments done in the past and shows the possibility that you are in arrears (non-payment) of the loan.
To know whether you are also in the list of those who have a bad credit history, then, you can go through the Credit Bureau Singapore Report to get the credit history report. It is chargeable and is $6.42.
The maximum score on the scale is 2000 whereas the lesser score is 1000. As per this scale, the score ranges in the 1,000 to 1,723 is considered as a bad credit rating. It is taken as risk grade “HH”.
The credit score can get affected by many factors. It includes how much new credit facilities you have asked for and how much credit is being used, the percentage of the inquiries the credit score has, and how late you are giving the payments. Additionally, your credit account history is good for longer, then, you can have a better credit score.
It becomes tough to determine what type of personal loans are accessible to those who have a bad credit score. The loan approval procedure is dependent on several factors and yes, this is not a transparent process.
Different Ways to Get Personal Loan Approval with Low Credit
1. Collect the Personal Details
It is essential to know your position from the perspective of a potential moneylender before applying for a personal loan and experiencing viable rejections.
- Analyze the credit score and the credit report
The credit report and credit score explain to you what the lender has seen while checking the loan application. To find out where the credit is currently, you have to check out the credit score. Do not get bothered- knowing the credit score is not going to affect the credit. This report shows the areas that are affecting the credit score in a negative manner.
Also, analyzing the credit reports shows where you are with the creditor. It gives you an insight into what you can do to rebuild and repair the credit score before initiating the process of applying for the personal loan.
2. Improve the Credit Score
As now you are aware of the credit score and what the lender or bank requires for the personal loan. Probably, you know where you stand now.
You do not require a credit score of 850 to have a loan, however, the score can affect the guidelines you have qualified for, like, interest rates and loan amount. Like; the bad credit loan has higher interest rates and could be used for less amount.
If the credit score is bad, then, you must improve it before starting the process of loan approval. The few ways to fix the bad credit score are; examining the credit report for flaws, paying down debt on time, solving the errors, and checking the hard credit inquiries on the credit history till there is an improvement in the credit score.
3. Get the Best Money Lender
Several online lenders reveal their least requirement for the annual income and the credit score; and the options, such as co-signers can also be there.
If you are able to fulfill the lenders’ least qualifications and like to check the estimated terms and rates, then, for financing, you are pre-qualified. For most lenders, the prequalification will trigger a clear credit pull, which will not affect the credit score
Pre-qualify with many lenders and examine interest terms and rates. The most suitable loan method is to choose the fee and payment that suits your budget.
4. Restructure the Outstanding Debts
A bad credit score is the reflection of the outstanding unsecured debt. To increase your probabilities of obtaining a personal loan, what you can do is to clear the current debt on a priority basis.
And, in case, you are not able to pay those debts, then, get in contact with the leading money lenders and check out the alternatives for restructuring the debt.
That is, work with them to lessen the interest rate which is charged on the sum you owe currently. The longer repayment period can also be negotiated to reduce the amount you require to pay every month, it can assist you to be regular with the payments.
5. Demand Smaller Loan Amount
The disadvantage of a bad credit score is that it restricts you from having a large loan amount from the moneylender. It is because of the reason that the poor credit history or poor score shows the impotence to service the loan payments.
So, it is better to improve the credit history on a priority basis; and apply for the loan. One way to do so is by getting a small personal loan. And, if this loan gets easy approval then, it is recommended not to miss the payments. Set reminders of the due date of the loan and make the full payment only.
The personal loan is here to help you in sorting the financial problems, but, it cannot control all of the financial issues.
With an improvement in the credit score and securing long-term financial goals, you can surely manage future financial freedom and health.
Have you researched before applying for the personal loan when you have a bad credit score?
We hope that you liked this article. In case, you have some doubts or suggestions then, let us know in the comment section below. Thanks for reading!!