#FinancialBytes: How to get personal loan with poor credit score?
What's the story
Credit score has become an important factor in our financial lives as it represents the creditworthiness of an individual.
A bad credit score can be a headache as it makes it difficult to access credit, whether it's a loan or credit card.
Despite having low credit scores, there are some measures individuals can take to take personal loans.
Here are some useful tips.
#1
One can prove eligibility with stable job, steady income
Lenders often measure the applicant's repayment ability based on their credit score. Those with low credit scores usually have poor chances of qualifying for loans.
However, lenders may consider such individuals' applications if they can assure them to repay the loan despite a bad credit score. Having a stable job, steady income, salary increment, or additional income source can be helpful in these cases.
#2
Apply for a lower personal loan amount
Individuals with low credit scores can try for a personal loan by applying for lower loan amounts. Asking for higher loan amounts with low credit scores poses a higher risk to lenders.
Lenders may feel such individuals could default on loan repayment if they take higher loan amounts. Lenders might consider if someone applies for a lower amount as it is easier to repay.
#3
Apply for loan with co-applicant or guarantor
Getting a joint personal loan is another good choice for people who have low credit scores. Applying for a loan by involving a co-applicant or guarantor can help individuals with low scores get loan approval.
However, the co-applicant or guarantor is required to have a good credit score and steady income. This will make the lender more likely to approve their loan application.
#4
Check your credit report for errors and get them rectified
Individuals with a bad credit score should also check for any errors or inaccuracies in their credit report and report the same at the earliest.
Mistakes in one's credit report could drag their score down. They should check their credit report regularly for errors/inaccuracies and get them rectified.
This will help in boosting their score and thereby improving their chances of securing loans.
Information
#5: Check for tie-ups between your employer and any bank
Sometimes, banks and other financial institutions have tie-ups with some companies to provide loans to their employees. Individuals with low credit scores can check if their employers have any such special arrangement with lenders for loans as the eligibility criteria here are comparatively more relaxed.