How Should One Get A Personal Loan With A Bad Credit Score?
Personal Loans are taken by anyone who wants to pay for certain things like if they want to buy a car, house or any appliances for their home they can take a loan.
A personal loan can be taken for any amount that is to be selected by the borrower not the lender and the final decision to lend that much amount of money to the borrower is taken by the lender.
Business loan or SME loan Singapore is also the same, but in this type of loan borrower can select the amount he wants, but the lender will give the amount of money after looking at the person’s credit score and repayment history.
A businessman can take a loan to buy an asset for his business, or he can use that money to invest for something that is going to be needed in his business, and the money that has been given to him shall not be used for anything else rather than the business.
These are the ways by which you can get a loan with bad or poor credit score:-
- Make your search boundary bigger:- Almost every lender makes cut off in their credit score rate so that he can give those people with that credit score the amount that they have asked for at a lower rate of interest.
People with lower credit score also get a loan, but they will comparatively get a higher rate of interest than the others because they couldn’t repay their older loan on time.
The best way to find a loan for yourself is to going to an online financial marketplace and searching for different lenders who provide a different rate of interests depending upon the borrower’s salary, credit score, location, job profile etc.
- Discuss terms with your lender:- If you have a bad credit score due to any financial problems and has affected your credit score, there is no need to worry as you can directly go to the bank you are associated with for a long time and ask them to help you out.
If you get a hike in your salary or you get a more secure job, then you can bring these items as proof to increase your credit score.
- Always take a secured loan:- If you take a secured loan then they take something from you as collateral and is a benefit for you as they will not focus on your credit score to give you a loan, but they will take the principal amount from whatever you have kept collateral if you fail to pay it back.
- You can take a joint loan:- In this; you can come with anyone you know and has a good credit score and take a loan under a joint name so that due to their credit score you have a chance a good chance of getting the loan.
How to qualify
Because personal loan and line of credit are two different products of financing your needs, they both have the same qualification that you should have a good credit score, and you should be approved to take a line of credit by the lender.
- Prove that you can afford to pay EMI’s:- You will have to prove yourself to the lender that you have the capacity of paying EMI back and make him believe that you have a stable and steady job.
- Apply with a co-signer:- If you have a bad credit score, then you can apply for a loan with a co-signer who has a good credit score so the lender will consider the credit score of the co-signer and might give you the loan amount you want.
- Keep collateral:- You can also keep something as collateral so that the lender can give you the money in exchange of any asset of your so the asset will act as collateral and if anything happens and you default to pay the loan back then he will sell the asset and recover the amount of loan.
- Ask for a low loan amount:- If you ask for a low amount of personal loan, then the lender might consider to give you the money as it is just a small amount and can be repaid quickly without extra efforts.
Whenever you apply for taking a personal loan or line of credit the lender of the loan will always check your credit score so that he can finally tell you the price that he is offering to you as a loan.
The only difference between their application processes is that in the personal loan you have to know the amount you will be taking a loan as you will take the whole amount of loan instantly and in line of credit you will be able to take a loan whenever you need it.
The rate of interest on the personal loan depends upon the amount of money you have taken on the first pay itself while the loan was approved and there is also a chance that higher the credit score you will charge less rate of interest.
In the line of credit, interest is started charging from the moment that you start using the amount of money accepted to you as a loan and as soon as you use a bit of money you will have to pay it back in the given time or your rate of interest will increase over time, and it is also depended on the credit score of the borrower.
How much can you borrow?
In a personal loan, you can borrow the amount of money according to your liking, and in line of credit you have to tell them the amount you want and then they will check your credit score and will see your financial position and check your repayment history of any previous loans.
I hope this article has provided you with relevant answers to your question.