This is sponsored content for Jacaranda Finance.
Nowadays, it seems almost impossible to live without a credit card. Credit is a well-established method of obtaining anything when you don't want to pay for the entire amount outright. You'll even find lenders like Jacaranda Finance that specialise in online loans to make the process of borrowing a lot easier.
However, what happens if your credit score is less than favorable? What happens when you have bad credit? Is it possible to get a loan then?
When your credit score is considered bad, it can be more difficult to obtain a loan. You may feel like your hands are tied behind your back. This can be extremely detrimental if you're trying to buy a house or purchase a new car. You don't need to feel this way. Bad credit loans are out there. You just have to research to discover what your options are and what you have to do to secure one.
1. Gather personal information
To secure a loan with bad credit, you must first gather all your information together to determine your financial situation. Look up your credit score and understand where your credit stands. By reviewing this information, you can tell where your problems are and what will cause the biggest issue for your loan applications. There are many credit-bureau companies online that can assist with this. Just look for the ones that don't charge you to sign up.
Find out what constitutes a good score. Depending on the company that's keeping the score, bad credit may be anything under 580. A fair score may be between 600 and 680, and a good score ranges from 700 and up. Check the details for each and their rating differences.
While researching your credit scores, pay attention to any suspicious items that are listed. If there's a discrepancy, challenge and file it immediately. These sites may be reputable, but it doesn't mean they don't make mistakes. There may be items on your report that don't belong to you. By reviewing your credit reports, you can also assess your finances and find out what to do to improve your scores. There may be things you can do immediately to improve your scores before applying for a loan. If not, you'll at least know what to share with your creditor.
Besides your credit report, you will need to know your annual income in relation to your debt-to-income percentage. This includes your monthly income, your expenses, and your employment history. Knowing these things can help make the loan process run smoother and prevent any surprises.
2. Speak with a loan officer or credit union
Once you've accumulated all the data that you need, speak with your local banks or credit unions. Ask them what their minimum requirements are for procuring a loan. You may find that a credit union might be more flexible with their lending than a regular bank.
Also check out what the criteria is for obtaining a personal loan. When dealing with your own bank, request a meeting with the chief financial loan officer. There may be things that can help you with your situation to help you secure that loan, but you won't know unless you ask.
3. Shop around
Before signing on the dotted line, shop around. Different lenders can offer different kinds of loans. However, only apply for a loan through a reputable company. Be on the lookout for any kinds of scams. Some loans may come with higher interest rates or be limited with a lower borrowing amount. If the terms seem too good to be true, they just might not be legitimate.
Depending on your circumstances, it may be in your best interest to investigate the following loans if you have bad credit:
- Personal loans
A personal loan is generally done through installments. On a monthly basis, you agree to pay the loan back on a regular scheduled date. These kinds of loans can be either unsecured or secured. An unsecured loan means that the loan is not backed by collateral of any kind. Because there's no security involved, it's a greater risk for the loaner. These types of loans are more difficult for someone who has bad credit.
- Payday loans
A "payday" loan usually comes with a higher interest rate, but offer a lower amount of money to borrow. They're generally short-term, as the borrower must pay back the amount within their next payday schedule. These kinds of loans seem tempting when your credit score is less than favorable, but they can also be very dangerous. Their high interest rates make them very hard to pay back, thus worsening your financial situation even further.
- Online company loans
An online loan is very different than those obtained through a bank or credit union or a payday company. There are a variety of companies that specialise in bad credit loans for those people who are experiencing a hard time with their finances; however, they don't carry the same high rates or practice predatory methods, or even have the risk as a traditional loan.
Some online lenders don't even check your credit score. They consider your employment, or your income instead. This can prove to be very helpful for someone with a bad credit score, but make sure that the company is reputable and trustworthy. Check out their lending practices first before deciding to sign up.
These are just some of the options open for you if you have a bad credit score and need to apply for a loan. Although the outlook can be quite bleak, there's still hope in the horizon. Do the research and be prepared for the consequences. With enough information at hand, you'll find a trustworthy lender to help you out.
This is sponsored content for Jacaranda Finance.