Loans are a modern man’s necessity. Everyone from a Billionaire to a common man takes a loan. The bare minimum that banks or lenders see before debiting a loan to a person is their credit score. Now, having a bad credit score will affect a lot many things when getting a loan approved.
What is a Credit score and how does it turns “Bad”:
A credit score is often coined with Credit cards but it isn’t just credit cards that affect your credit score.
Things like;
- Not repaying your loans on time
- Using more than 40% of your credit limit
- Too many credit applications, etc.
In layman’s terms, a credit score is a number typically ranging from 300-900 (CIBIL SCORE). A man falling under the range of 600-550 is said to have a bad credit score.
What are “Bad Credit loans”:
These are a type of loans provided to the loanee at very high-interest rates with knee-deep paperwork to get approved. People lean toward this because of their bad credit score with no time in hand to improve it and are in urgency to receive the money.
Is it easy to get a loan with a bad credit score?
Well, it’s not mission impossible but is very hard to get one. As mentioned earlier, bad credit loans have their niche like hefty Interest rates ranging from 10-36% and a lot of requirements that are to be fulfilled.
How to make bad credit loans affordable?
There isn’t any rocket science required to accomplish this, just some planning and a few tricks that’ll surely help you in getting bad credit loans at much lower rates of repayment.
- Boost your credit score before applying: After knowing your current credit score boost it to at least 720 which is said to be an ideal credit score. Just paying your old loans, maintaining your credit card limit, talking minimum loans, etc. will help you to raise your credit score exponentially.
- Add a co-signer: Co-signer is someone who agrees to pay your loan if you are unable to repay it. This reduces the risk to the company of losing money.
- Add collateral: Adding collateral to your application can improve your chances to get a loan with much lower interest rates.
Taking a bad credit loan isn’t a crime, but just keeping your credit score in check can get you rid of hefty interest rates. Bad credit loans should be your last resort if anything doesn’t work out.
