Bad credit score is not good for you. It hurts your credit worthiness. You become less worthy of availing loans. The longer the red flags stay on your credit report, the more harm would it cause to your credit raising capability. However many a times, you need loans urgently. There is just no time to mend your previous credit history. You need loans, almost, immediately.
But before you contact a lender, you must know that with low credit score, lenders would reject your loan application. Each rejection can further deteriorate your credit worth. Herein, is it recommended to apply for bad credit loan? With poor cash flow how would you manage more debt?
The concerns raised here are rightful, as poor debt borrowing is more challenging than borrowing in the normal circumstances. While there is a pool of FinTech companies who directly deal with poor credit score bearers and extend bad credit loans, the processing of bad credit loans is not that straight forward. There are several challenges faced by a loan applicant with poor credit rating. Some of them are discussed below:
High interest rate When you have low credit score, lenders would charge you high interest to protect the loan amount. You would find it difficult to fund a high cost loan. With current cash hassles, arranging repayment would be another challenge.
Paper work When you do not qualify for a loan, the lender might ask you for more papers to be sure of your credibility. You may need to show possession of high priced assets such your home to establish your credibility to avail a loan. Your search for bad credit loans with no credit check or no guarantor would not end with no paper work.
Small loans It would be easier to draw small loans with poor credit rating. For there is more risk for the lender in a long term loans. You being low on credit eligibility should also avail small loans.
Income Proof With already exhausted credit limit, establishing credit worth would also entail proving other sources of income. You would need to prove that you have enough back up for repayment. Thus if you have other sundry sources of income, you should be ready to present the proof for the same to the lenders
You need to clearly know about the pros and cons of adding more debts to your kitty. Before seeking a bad credit loan it is important to ensure that it doesn’t hurt your credit rating further. Every credit check hurts your score further. You would need a loan search that doesn’t create a hard check every time. Using an authorised broker’s service could save the game for you. For many brokers do not charge anything from the borrowers. They can search rare deals which are hard to find by yourself. The brokers are also better negotiators and help you get best possible rate.
Thus decision to borrow with poor credit rating should follow an expert’s advice. You need to be informed to make an informed decision.