It is well known that a “good” credit score drives the loan eligibility. Whether you need an urgent loan to fund a home improvement plan or to work on a great business idea, a credit score above 750 points would play a crucial role in making you eligible for the same. In contrast having a moderate score from 600 to 700 points can put you into a difficult situation. https://ifeemagazines.com/
Having a score less than 700 points makes you ineligible to borrow at the best of interest rates. You would either need a loan security to borrow or you would need a credit improvement plan. Let’s explore each aspect of improving your score step by step below:
Understand how credit check works
Every time you apply for a loan or a credit card, the lender makes a query regarding your past credit history and score to any of the top credit bureaus. Based on your past credit rating, the lender would qualify you for the loan. Higher is the score, the less risky is your profile for loan.
This credit check is hard credit check and makes a footprint in your credit report. Multiple credit checks in a short duration hurts your score. Thus you must make a loan query only when you are confident of its approval. A loan rejection can further hurt your score.
A low credit score basically highlights insufficient borrowing capacity owing to high debt to income ratio, irregular repayment history, high credit appetite or more unsecured loans as compared to secured loans.
Work on your score
Before you apply for a loan, it is important to assess your credit score. Evaluating your credit health plays a vital role in making your eligible for credit. You must pull out your free credit report from the credit agency. Herein make sure all entries in your report are known. You must review it for errors. Many times, manual or technical errors can create a bump on your credit score. As you would dispute a mis-report, the score would revive as the change is processed.
Next, you must adopt some good financial habits. You need to ensure payments of your credit bills and loan repayments on time. Not to mention, it is important to use credit card sparingly. As a rule of thumb you must not use more than 30 percent of the available credit limit.
Following a financial discipline would not help your score immediately but it would certainly show up within few months. The best you can do with bad credit history is to make it redundant by adding new good history. Thus only constant efforts would help you build a good score.
Contact Private Loan Partners
When you need urgent loans with low score, you can consider using a collateral or guarantor to become eligible for loan. If however you find that the lender’s terms are too rigid, you must consider contacting a licensed private loan advisor.
A loan advisor or broker can help you find available loans. Generally these loans are designed for borrowers with credit rating limitations. Thus they offer more flexible and tailored loans online. You can compare and choose the most affordable loan according to your situation.
A word of caution: While a private loan broker can help you find a loan despite bad credit history, it is important to assess the loan affordability before availing one. You must never borrow additional loans for casual cash lapses. For these loans are generally high cost loans and attract hefty late payment charges. It is important to work on loan repayment before adding on to debt burden.
Maria Smith is a loan advisor at Best Short Term Loans. She is a professional personal finance blogger and actively writes about bad credit loans and debt management.