Personal Loans and Bad Credit

If you have poor credit, most credit providers consider you a high-risk borrower, but there are numerous lenders that specialise in bad credit personal loans. The first thing you should do is find out your exact credit rating, which we can provide for you.

GetCreditScore is a leading online platform that can help you obtain your credit score and credit report in just a few steps. Sign up today and get access to special offers on a range of financial products and services such as credit cards, personal loans, car loans, home loans, business loans, and insurance.

Your credit report can help you determine what mistakes you committed that caused your credit score to decline. You can also review the document for errors that should be addressed immediately – perhaps a lender or debt that you do not recognise.

If your credit report is accurate, you can take the following steps to improve your credit score before applying for bad credit personal loans:

• Automate repayments. We recommend you set up direct debits online to avoid late payment fees. A calendar reminder can help you keep track of your accounts to make sure you stay on top of your payments.
• Reduce debt-to-credit ratio. You should try to pay at least double the minimum amount required to reduce your credit card and loan debts.
• Clear defaults. Take a look at your credit report and close any accounts you no longer use.

If none of the tips above is viable, but you want to consolidate your debt, taking out bad credit personal loans may be a reasonable solution. There are lenders who are willing to take a deep dive into your application and listen to your side of the story.

What are personal loans used for?

There are several circumstances for which you can use bad credit personal loans:

• Medical expenses. If you need urgent medical attention, taking out a personal loan can help cover your treatment costs.
• Debt consolidation. You can roll multiple debts into a single payment through a personal loan. 
• Car repairs. If you own a car, repair costs are inevitable, but you can take out a personal loan to get the job done immediately.
• Rental bonds. The cost of moving houses is high enough even without the security deposit. If you need money to pay the rental bond, you can take out a personal loan.

Want to know if you are eligible for bad credit personal loans? Your first step should be to obtain a copy of your credit report and credit score. Sign up with us today to get exclusive offers on financial products and services!

What is the minimum credit score required for a personal loan?

Your credit score is just one of the many factors lenders consider when calculating your loan amount and interest rate. At Equifax, our credit scores range from 0 to 1,200. Higher numbers indicate better credit. Scores above 800 are viewed as ‘excellent’. You have usually ‘bad’ credit if your credit rating is below 500. However, some lenders accommodate borrowers who have credit ratings under 200. You can also use credit repair services to improve your score and qualify for personal loans with better interest rates. 

Can I get a personal loan with bad credit?

There are traditional lenders who specialise in bad credit personal loans to accommodate borrowers who have poor credit scores. However, not all bad credit scores are equal – for instance, paid defaults are viewed more positively than unpaid defaults. The same can be said for defaulting to an energy company versus defaulting to another finance company. 

The lenders who offer bad credit personal loans take these factors into account when assessing your application. Moreover, credit providers favour borrowers who have held the same job and home for a long time.

It is worth noting that getting a personal loan with a bad credit score is significantly more difficult than obtaining a loan with a good credit score. That is because loans are centred around trust, and lenders need to ensure that you are capable of repaying them in full.

You should also understand that loan applications are subject to risk assessment. If a lender believes that approving your application is a significant risk, you are likely to incur a considerable interest rate. However, you can always improve your credit score over time and refinance your loan to get a better deal. 

The new Comprehensive Credit Reporting (CCR) system contains more information that will affect your ability to borrow money or get credit. For example, the inclusion of repayment history now displays your positive financial habits; if you remain diligent about keeping up with your credit obligations, your credit report can demonstrate your sound financial management to lenders. You may even move from one risk category to another, giving you much better chances of getting approved for a personal loan. The implementation of Comprehensive Credit Reporting is also expected to drive more market competition, leading to lower interest rates in light of your positive credit behaviour.

Take the first step towards a better financial future and check your credit score and credit report now! You can also use the information found on your credit report to see if you qualify for a home loan, car loan, or credit card. Sign up with us today to get exclusive offers on financial products and services!

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.