Do you need personal loan bad credit but it seems that getting money from a lender is a difficult process? While people with sparkling clean credit scores immediately access low interest loans, the rest of the population are finding it hard to locate reasonably priced personal loans. That’s why borrowers who need to immediately get their hands on advanced money for meeting a personal need, hospitalisation, starting up a business, improving a property, financing a vehicle or any other purpose end up in a pile of debt.
Here are five common mistakes to avoid when applying for personal loan bad credit:
Getting High Interest Rate Loans
Predatory lenders are looking for borrowers with bad credit who they can charge extremely with high interest rates. Compare the interest rates with the traditional lenders and bad credit lenders online. Don’t settle for the “low-introductory rate” even if you think you can pay off the loan early. Imagine the worst case scenario—and compute how much you have to pay when you fail to make up to 3 monthly payments. Do your math and check if the interests and fees are worth it.
Many lending companies for bad credit often boost the interest rates the moment they are approved. So, read the contract before you sign them. Compute it up to the last rates and fees to have a definite idea of the real cost of the loan.
Failure to Bring Down Credit Risk
Unsecured loans like credit cards, personal loans and payday loans are costly for a reason—high credit risk. One way to bring down credit risk is to show income and assets especially if you are one of those borrowers with marks on their credit. Lower your common-sense lending risk by attaching financial documents to your loan application.
If you have thousands of dollars in the bank, or you have a home which carries a high-equity, or you have tangible assets that you can use as collateral like equipment, vehicle and the like, you will be a better credit risk than your credit score implies. Yes, even if you have a seriously bad credit because of past bankruptcy or judgments, the right lenders, might overlook your bad credit score because of those mitigating factors.
Not Making a Budget
If you’re struggling to pay your debts there are two things that you can do right now to set it right – know where your money is going and prioritise your spending.
If you’re too busy, chances are—you are one of those who simply guess at their income and expenses. Worse, if you don’t have time to read your bank statements, bills and shopping receipts for accurate figures. It is extremely difficult to find areas where you can cut spending when you don’t know where your money is coming from and going to.
You can start by getting a credit report to trace your current financial obligations. It will help you discover some purchases that you could have avoided. For example, if you maxed out a credit card, try to recall why you did it and if it is possible for you to avoid repeating the same mistake in the near future. You can also ask yourself if the purchase was worth the interest fees and additional charges, especially if you have defaulted on the loan payments.
Budgeting might mean making hard choices, such as reducing daily expenses, taking public transport, making your coffee instead of buying from your favourite cafe, and totally removing weekly movies or dining out from your list. But, remember that small adjustments can ultimately make you more financially stable.
Filing for Bankruptcy
Bankruptcy should be a last resort. If you have other options, exploit them because bankruptcy totally ruins your credit. While it is advisable during catastrophic financial conditions and the courts may grant your loan discharge through it especially if you’ve made good faith attempts to pay your debt, it pushes your credit score to the brink. It also warns future creditors that you were not able to pay for your obligations once, and you may do it again. Though a good credit repair company can repair your credit, and work out some strategies to augment your credit score, despite bankruptcy, still it is advisable to look for other debt management options before declaring yourself bankrupt.
Not Fixing Your Credit Score
If you want to increase your lending approval chances, fix your credit score. It will also lower credit risk.
A reputable credit repair company like Clean Credit can point out errors in your credit history to the four credit agencies in Australia responsible for maintaining your credit record. They will pull out your credit score and evaluate your credit history. This way, you will also know if you need to do some minor payments– which can boost your score, such as:
- Taking out the right small debts
- Paying them off on time
- Paying off old creditors
- Negotiating with current creditors to get a lower payment, reduce interests or even forgive some debts.
Credit often stands right in the way of a low-priced loan. Fixing a bad credit score can help you in seeking out favourable lending agreements, and some workable solutions to boost your credit score for the moment.
Clean Credit helps you start with a “clean slate” and give you a clear understanding of your borrowing habits. Contact Clean Credit to learn more about fixing your credit score to get the most reasonably priced personal loan bad credit available.