Bad credit may have an intense impact on your future credit applications, at least until you have paid off your existing loans. Or, it could be for the next seven years of your life when negative entries would be deleted from your file, permanently… No one is exempted from having a bad credit. Even the most hardworking, organised and budget conscious person, may get a very low score because of some minor or major glitches that they overlooked in the process.
Here are some reasons why you have bad credit score and how loans for bad credit can fix them:
You have no debt
You don’t have to be broke to get a bad credit score. In fact, you don’t have a debt that will automatically lower your score. So, cross out ‘never borrowing money’ from, your to-do-list, because it does not help you build a good credit score.
Lenders are looking for signs that you can repay what you borrow, so if there are no records showing that you have been paying your debts on time, there is a slim chance that your application will be approved. Notice that even top credit card companies and lending agencies don’t easily accept applications of people with bad credit due to the absence of debts, even if they have the means to pay back a loan.
While you don’t need to get deep into debt to boost your credit score, getting loans for people with bad credit to finance big projects is a logical move. For example, if you want to invest for the future, you can increase your home equity by making major home improvements to increase the value of your property. You can add money into your retirement funds, invest in high performing stocks or simply start your own business to generate profits, for future consumption.
You are making just the minimum repayment on your credit card every month
Even though you are not really missing your monthly repayments, lenders may assume that you are struggling to pay your debts—since you cannot pay it in full.
Simply putting off repayment for next month will make you liable to pay a fixed amount which is usually a certain percentage of your credit card balance. While banks may only set the rock bottom level of 1%-2% of your monthly balance, you still need to pay fees plus accumulated interest. So, by making the minimum payment—you are not really saving money. Instead, you are accruing additional charges and not making any progress when it comes to eliminating your credit card debt.
But, if you want to shorten the repayment period, don’t just pay the minimum each month. Shorten it by paying more or by paying all of it—using bad credit loans. This way, you could prevent accumulating bigger interest rates and your credit score will improve in the process.
You forgot to stick to the terms of your original debt agreement
If you miss loan repayments, or you made credit card and loan repayments your borrowing ability might weaken-because this information will surely appear on your credit file.
Having a bad credit or bad credit score means that you must have accrued bad credit unknowingly because of the following:
- Co-signing a loan, which is now declared in default
- Exceeding card limits
- Making frequent credit applications
- Making late payments
- Skipping payments
Bad credit history is a huge warning sign to lenders. You cannot easily escape its consequences because lenders would be very interested to know not only how much you are going to pay for the loan, and whether you will run out of your obligation or not. Given that a bad credit personal loan lender knows your credit score—they will decide if you will keep your end of the contract this time. They might require proof of income, an established credit history, at least for the previous months, to show that you have practiced a good repayment habit.
Bottom Line
It is important to look at the positive side of things when dealing with financial issues. For example, bad credit can be considered a financial opportunity to do better. Sure, being refused a loan is not all peaches and cream. But, instead of dwelling on your limitations, you can apply for bad credit loans to fix issues like unpaid debts, maxed out credit cards and negative entries in your credit file. You can consolidate your debts and deal with each negative issue, one by one, until you have fully taken control of your finances.
Should you still find yourself unable to get the loan you applied for, it might help if you could contact us as soon a possible. We offer loans for people with bad credit at affordable rates. Make an enquiry today!