Monday, April 28, 2014

Have Bad Credit? Here's How to Apply and Get Approved for a Loan

Many of us have incurred bad credit, i.e. a poor credit rating/score and have consequently found applying for financial products – credit cards, personal and home loans, etc. – tough going.

That’s rapidly changing and many banks and lenders are now far more willing to work with people with bad credit than in the past.

If you’ve incurred a poor credit rating there’s still a good chance that you’ll be able to successfully apply for financial products again the future, though you might have to improve your credit rating beforehand in order to access financial products on competitive terms once again.


Improve your credit rating


Do you know your credit rating? If not, how do you know you’ve incurred a poor credit rating or are you just making an educated guess based on your adverse borrowing history?

Many borrowers have no idea of their credit rating before applying and they’re putting themselves at a disadvantage straight away because knowing your credit score enables you to leverage your borrowing options.

You can obtain a copy of your credit report once per year and under various circumstances from any of the national CRBs – D&B, Experian and Veda – for free; however, if you’ve already obtained a copy within the last year you’ll need to pay a small fee.

To obtain a copy, contact one of the national CRBs and provide the following details:

  • a. Full name
  • b. Date of birth
  • c. Current and previous addresses
  • d. Driver’s licence details
Obtain a copy before applying for credit – you’ll better understand the options available to you.

If you still have a credit card, use it to make small purchases on a regular basis and pay the outstanding amount in full each month in a timely manner. This will help to repair your credit rating, though bear in mind it takes time. 


Bad credit loans – An option to consider


Bad credit loans are loans made available to people with poor credit ratings – including those who’ve really made a mess of their borrowing history.

These loans generally come with a high APR and are hardly competitive with regard to interest rates or terms and conditions, but if you’re really stuck they’re an option you may need to consider. 

Apply to your bank


After you’ve obtained a copy of your credit report and you know your credit score, contact your regular bank and discuss your situation with them, preferably informally, i.e. without making a formal loan application.

The reason for this is that every time you apply for credit you’re triggering an enquiry into your credit history which has the effect of lowering your credit score slightly.

By enquiring informally and informing them of your credit rating you’ll be able to avoid this and you might also be able to successfully apply for a personal loan through you regular bank, though this will naturally depend on your banking history with them.

However, if they knock you back because of your credit score you’ll need to look at other alternatives, many of which like bad credit loans, instant payday loans and similar loans are often, though not always, hardly competitive though they may be the only options available to you.

There are an increasing number of reputable online lenders, some of which actually offer competitive rates, terms and conditions in addition to quick and easy online application processes.

Nonetheless, double-check lenders’ backgrounds you consider applying to before applying and bear in mind the importance of limiting the number of applications you make.

There are a number of options available to those ‘bad credit’ – ensure you know what to make of them.

About the Author:
Get Approval is a finance company in Australia that seeks to assist individuals in applying for a business or personal loan. They have devised a simple process for loan applications so eligible applicants can receive their needed funds quickly and with less hassle.

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