Credit score has become an integral part of our financial well-being. To be eligible for any kind of credit, a good credit score is essential. But we are humans and it is natural for us to make mistakes. Sometimes, that might cost us our credit score. Once we get into the territory of bad credit scores, getting further credit on the best terms gets increasingly difficult.
However, there is still hope. Did you know than even after having a bad credit score, one can still get credit? We bring you some of the options that you could try:
A Credit Card with a Fixed Deposit: Normal credit cards are unsecured credit, so the issuers look for individuals with a certain level of credit score. So, when you are faced with a situation where you are not allowed a normal credit card, going in for a card against a fixed deposit/prepaid credit card could be a good option. Suppose you have a fixed deposit but do not want to spend that amount, you can apply for a credit card against the Fixed Deposit. You would be issued a credit card with a credit limit matching your FD amount. Use the card diligently and you would see your credit score move up.
A Gold Loan: The Gold loan is a secured loan against mortgaged gold. If you are stuck with a bad credit score and need some credit immediately, exploring a gold loan is a good option. You could mortgage gold ornaments/bars lying idle with you and draw a loan against those. As you are placing your assets as a mortgage, your low credit score should not be much of a problem here. And as you pay back the loan on time, your credit score should get higher.
A Personal Loan: Personal loans are also unsecured loans, hence they carry a higher rate of interest. When you need a small amount in loan and have a bad credit score, personal loans may be an option, especially when applied at a bank where you have been operating a salary account or a fixed deposit account. Based on those accounts, you may be approved a personal loan. But remember it may not be on the most favorable interest rates. As the bank is taking a risk by lending to a not-so-creditworthy person, they will look to be compensated with a higher rate of interest than usual.
Other short-term credit options: There are a number of Fintech companies which grant small loans to customers through their websites or apps. These companies need not necessarily go strictly by the credit score requirement. Instead, they utilize other ways of predicting the credit behavior of an individual like social media profiles and activity, employment details, your residence details, etc. Borrowing from these companies could be an option to explore.
There may be other factors too which may help you in getting credit, such as opting for a loan with a co-applicant, opting for smaller amounts of loan, etc.
Once you get fresh credit, make efforts to pay installments as and when they are due. Also, take care not to repeat the mistakes that could pull your credit score down again.