Having a bad credit record may be as a result of a number of factors. You may have been retrenched, leaving you without an income to afford your debt repayments. You may have made some poor financial decisions, leading to missed debt repayments and a bad credit record as a result.
While it may be more challenging to get access to finance with a bad credit record, it isn’t entirely impossible.
The good news is that there are measures you can put in place to make it easier for you to get personal loans with bad credit.
Get your free credit report.
Every credit-active individual is entitled to one free credit report a year. Check to see if there are any inaccuracies on your credit report and make sure they are corrected if there are any.
Approach your bank first
Try applying for a personal loan from your bank first. If that doesn’t work, approach other direct lenders. Your bank may give you the reasons behind your declined application, making it easier for you to know what to improve on.
Check if the lender charges an origination fee.
This amount is deducted from your loan proceeds, so the loan proceeds you receive will be less than the full amount of the issued loan.
Do everything you can to improve your credit score.
Try to pay down your debts to under 30% debt-to-income ratio and minimise some of your expenses.
Prepare to pay high interest rates.
Getting personal loans with bad credit often means that you will have to contend with high interest rates; because you are regarded as a high-risk.
Do your research ahead of time.
Consider leveraging your assets. For instance, using your home equity line of credit may be a great option.