What Does It Mean To Have “Bad Credit”?
When a borrower is said to have “bad credit”, it means the borrower has a high-credit risk. Put differently, a low score shows that the borrower has bad credit (credit score is the number lenders use to quantify the risk level of a borrower).
Normally these borrowers have a low score since they either in the past failed to make prompt payments. Or it could be that they owe a large sum of money. For this reason, it will become much harder for these borrowers to get the best loans. This is because their loan options are limited owing to their bad credit record. This will influence the perception that lenders have about their capability to pay back a loan.
Inevitable Financial Situations
Unfortunately, not many Singaporeans will do this due to the numerous of unavoidable life situations they often face. For instance, being retrenched or medical emergencies will cause you huge concerns. This is particularly when it comes to your financial standing.
When faced with such occurrences, you certainly will be in urgent need of some extra money. The loan amount is intended to help you take care of your personal expenditure. However, having a bad credit will turn out to be a major challenge for anyone.
The entire process of obtaining a personal loan may be tough. This is especially when you would like to take a personal loan from banks and licensed moneylenders in Singapore.
Can I Get A Loan?
Even as you are dealing with such challenging situations, you should not give up just yet. You need to recognize that you can possibly access a loan even when you have a bad credit. The crucial thing for you would be to start rebuilding your credit status. Doing so will assist you to take back the reigns of your finances.
In reality, there are numerous different loan types available for people with poor credit. Hence, make certain that you carry out lots of research before you apply for any loan. Researching will help make sure that you find the right lending option to suit your needs.
One major disfavor of this loan types is the rates of interest charged to them. This is since they are usually very high. This is when they are compared to the regular bank loans. Then it means that those loans given to borrowers who have healthy credit scores attract lower interest. But then again, these loan options have many positives aspects too.
For example, few moneylenders will lend to borrowers who have low credit scores. They, however, have the opportunity that lets them work with a co-signer. For this, you will need to have someone with a quite healthy record. This option allows borrowers to have the chance to take out a loan. Such a loan option will normally attract lower rates of interest. This is when it is compared to what they will get without a cosigner.
Likewise, when your rating is rather low to the extent that you are not meeting the requirements for the unsecured loans. Do not panic, since you will find a few moneylenders who will offer you secured loan option. In such conditions, you may want to consider putting in your car, for example. Doing so will help you get the loan you wish to take out.
You will need to need to be careful as you are seeking out a loan yet have a bad credit. Sometimes you could find you have been trapped in those bad credit scam. To help you avoid these, look out for the following:
Moneylenders who ask for money in order for you to submit a loan application (this is illegal);
Moneylenders who pressure you into getting loans with them. This is particularly before you have time to look at all the choices available;
Lending institutions that will push you in order that you share with them your personal details. It is more so those lenders that will insist that you do this over the phone;
Finally, always make sure you are working with a licensed and legal moneylender.
Things To Think About Before You Get Loans With a Bad Credit
When you are considering getting a personal loan with a bad credit. Here are some guidelines that you need to bear in mind.
To start you off, you could try to analyze how you ended up in such a situation. Do this prior to actually submitting an application for any personal loan. In doing this you will be able to find a lasting solution. This is because you will be avoiding those mistakes that got into you trouble in the first place. Particularly after you take out the new loan.
When you look at your poor credit state you can be able to examine it. You will also be able to find out whether you will be able to pay off the new loan.
Examining your bad credit situation will allow you to make sure that new loans do not make worse your score. Since it is in a bad state already.
You continuously need to get small steps in improving your creditworthiness. This will, in essence, ensure that your worthiness for credit improves. Also, the lenders will check whether you are really making efforts. This is intended to make your score better.
Make sure that you are making punctual payments on your bills. Always make sure you do this before you request for another loan.
You will need to stop being stressed about having a poor credit history. It is all right that you have made wrong choices regarding your finances. But since you have the chance you need to rectify them bit by bit.
Avoid getting several credit options. Certainly, you know the consequences of these actions.
Make sure that you are consistent while you apply the above-named strategies.
In conclusion, always ensure that you assess all loan options available. This needs to be before applying for new loans. Try to locate a moneylender who will understand your needs. Of importance ensure that the money lender is certified.