By Mitch Rice
Most people first get to know anything about their credit scores when applying for a loan. Most lenders will be wary of giving you an advance if you have a bad credit score.
However, there’s no reason to panic as there are lenders who have loans specifically for individuals with bad credit ratings. This post goes over how one can get an advance even with a low credit score.
1. Widen Your Loan Search Horizon
The cut-off credit rating used for assessing loan applications can differ across lenders. Some lenders have high credit score cut-offs, while others have low cut-offs.
If you’re a borrower with poor credit history, the best thing to do would be to widen your lender search to find those willing to give fast cash loans. The best way to do this would be to sign up on online brokerage platforms such as Viva Payday Loans, connecting you with various bad credit lenders.
2. Consider Taking Out Secured Loans
If you fail to qualify for unsecured loans such as personal loans or credit cards, consider applying for secured advances. Secured advances are loans that you back with assets such as a car or house. They are a better option if you have poor credit.
Secured loans have lower interest rates than unsecured loans, and the lender risk is reduced since borrowers put up collateral. Keep in mind that you risk losing the asset if you default on payments.
3. Opt For A Joint Advance Or Add A Guarantor
Another method of getting a loan, even with a bad credit score, is taking out a joint loan. A joint loan refers to an advance that you apply for and someone else who has a good credit rating. This increases the likelihood of lenders approving your loan application since the co-applicant has a good credit score.
Additionally, adding a co-applicant with a good credit score lowers the risk for the lender. If you default on the loan, the co-applicant becomes liable for repayment.
4. Go For NBFC Or P2P Platforms
Since conventional lending institutions carry out strict credit checks, which can sometimes lead to hard inquiries that can further damage your credit score, you should consider applying for loans from Peer-to-Peer (P2P) or non-banking financial companies (NBFC). These platforms usually charge higher rates than banks.
Peer-to-peer platforms are the best option if you want a quick loan and a low credit score. Aside from flexible loan terms and paperless disbursements, these sites also have more competitive interest rates than NBFCs.
5. Take Out A Small Loan Amount
If you have a low credit score, you should consider taking out a small loan like a personal loan and pay it back regularly to build a good credit profile. You can strengthen your creditworthiness with time and eventually apply for a bigger loan from a bank or any other financial institution.
Bottom Line
Getting an advance with a low credit score isn’t impossible as many lenders provide urgent loans for bad credit. The key to getting such loans is proving that you have the means to make timely repayments.
Data and information are provided for informational purposes only, and are not intended for investment or other purposes.
