Credit history and credit scores will aid lenders determine if you can manage responsibly your loan. Negative listings like default accounts and late payments can indicate financial challenges. Thus, it can increase the risk of getting your personal loan to be approved.
As such, the options available for borrowers with a bad credit history is limited. Furthermore, these available options can have higher interest rates, fees, and other restrictions versus other personal loans Singapore. Thus, it is very important to compare carefully the available options before you decide if the loan is right for you.
Understanding a Bad Credit Personal Loan
Borrowers whose credit scores are less, experience bad credit personal loans Singapore. If you have a low credit score, lenders will see you as someone who will be delinquent in paying the loaned amount. Larger companies don’t usually lend money to borrowers below this threshold.
Luckily, other companies consider other factors more than the credit score when it comes to borrowing. Sometimes, they will look into your current debt, income, and ability to repay before approving or denying your application. This will provide you with good options whenever you are in a strong need for money. However, you may pay more than those borrowers with good credit scores.
Try Borrowing a Small Amount
It is a given that those with a bad credit score might have difficulties borrowing a large amount of money. This is true considering that their credit score will reflect their capacity to pay.
As such, it is always best to improve your credit score before applying for a larger loan. To begin, apply for a small personal loan. Make sure that you do not miss any repayments for it. You can try making regular notifications on your phone. You can also ask a family member or a friend to remind you about the due date. You can also take note of it on a large calendar. Pay in full as much as possible.
Indeed, rebuilding your credit will mean that you will have to pay during your repayment schedule. This will show to any financial institutions that you can pay your loans even if you have a bad credit rating.
To go through this route, you will have to keep borrowing a small amount of money until you earn a good credit score. Do this until the financial institutions let you borrow a large amount of money.
Furthermore, you can rebuild your credit score by reducing your credit bills and opening new subscriptions. Finally, avoid yourself from asking another credit facility to check your financial credentials since this will reflect in your record.
Consider Alternative to Banks
Large financial companies have strict protocols when it comes to borrowing money. As such, if you have bad credit, no means no. However, instead of giving up, you can try applying for other financial institutions.
Indeed, many are willing to provide you a second chance. For example, there are the pawnshops where you can bring your luxury goods and take your loan. Meanwhile, if you are looking for a longer time horizon for repayments, you can check the licensed moneylenders. They are more flexible when it comes to accommodating your requirements.
You might also qualify for an online personal loan even if you have bad credit. This is true if other aspects of your personal loan will still meet the eligibility criteria of the lender. You might finish your application quickly and receive your funds in instant. However, the interest fees might be higher than in credit unions or banks.
Do Your Research
Eligibility criteria will vary from bank to bank. However, the majority of the providers lend to borrowers ages 21 to 65 years old only. If you are applying to banks, you must prove that you are earning at least $20,000 annually for locals. Meanwhile, for foreigners, you must prove that you are earning $40,000 each year.
Next, you must make a list of providers. The minimum income requirements will differ depending on the provider. As such, make sure that you check which ones you qualify for. Forget about the ones that are not suitable for your needs. For those financial institutions that are willing to lend you, check if they will offer guaranteed interest rates. With this, you will not get surprised with high rates basing on your credit score.
Finally, the results of your application will vary depending on the provider. Some providers will give you a higher interest rate especially if you apply with a low income or bad credit score. Thus, it is best to avoid mass applying at multiple lenders. This will only signal the credit bureau that you are credit hungry. This can also affect your credit score furthermore. It is still best to apply for your loan one by one. Discover more how you can take a loan even if you have a bad credit with the guide from MoneyIQ – instant loan in Singapore.