How do I get a loan with bad credit?
A more relevant question is, “Is it advisable to get a loan with bad credit?” There is a chance you can get a loan if your credit record is not good, but it is not advisable. If you are lucky enough to get a loan, you will be doing long term damage to your credit health and incurring a needlessly heavy repayment burden. Instead, if you have poor credit, you can save significant money on your repayment burden by first improving your credit before applying for a loan.
Is it possible to get loans with poor credit?
Yes, it is possible. If you do not a very poor credit record, there is a chance that a lender might decide to approve your application. Each lender has their own set of requirements and evaluation criteria, so you might be approved by one lender while being turned down by many others. One lender might be willing to take the risk of lending to a customer with poor credit, but with tougher loan terms in order to safeguard their money.
What are the disadvantages of applying for loans with bad credit?
1. If your loan application is rejected by multiple lenders because of your poor credit record, each rejection will cause your credit score to drop further and damage your credit health – even if you are finally approved for a loan. If you are rejected 4 times before being approved by the 5th lender, your credit score will decrease with each rejection.
2. Even if your application is approved, you might be subject to harsh terms and conditions on your loan. You might be given a higher interest rate, shorter repayment period, or a smaller loan amount.
What should be my first step to obtain a loan if I have a poor credit record?
First, you need to concentrate on improving your credit. This can take an average of just 4-8 months, depending on how serious your individual credit situation is. Once you improve your score, you are in a position to have your loan approved and prevent the chance of rejection and a consequent decrease in score. Another advantage of a good score is that you can avail of far more attractive terms and have a lighter long-term repayment burden over your loan period.
If you have bad credit, CreditMantri can guide you in improving your credit health so that you can become loan eligible and save a substantial amount of money in the long term with your improved credit.