Poor Credit score

  • A poor credit score reflects an individual’s credit history while indicates that the borrower has high credit risk.
  • A low credit score is a sign of poor credit score, while a high credit score indicates good credit.
  • Creditors who give money to a person with bad credit face a huge risk of that individual missing payments or defaulting than creditors who lend to individuals with good credit.

How to determine the credit scores                  

  • Fair Isaac Corporation (Fico) calculates Personal loan credit score uses three credit bureaus
    • Equifax
    • Experian, and
    • TransUnion
  • FICO Weigh various information in strategic ways to calculate the score. Fair Isaac Corporation (FICO) score ranges from 300 to 850.
  • Borrowers with scores at or below 579 have a poor credit score. Experian have said that 61% of borrowers with scores in this range are likely to default or seriously delinquent on their loan payment in the futures.
  • A credit score between 580 & 669 is labeled as fair.
  • The rest of these borrowers are likely to become seriously delinquent on loans, making them considerably less risky to lend to borrowers with a poor credit score.
  • Even borrowers within this range face high-interest rates or have trouble securing loans.

Common Sign of a Poor Credit score Include:

  1. History of late payments for housings, utilities, or monthly bills
  2. The problem is getting a lease for housing
  3. Cell Phone companies won’t give you a contact
  4. The checking account is overdrawn regularly
  5. Paying higher interest than we see advertised

All of the above mentioned hurt your credit score & making it more difficult to get a loan. If you have a bad credit & need a loan there is an option available in the market but it will take time & research to find the best one suited us.

Methods for getting Loan with Poor Credit Score

Visit the Credit Union

  • Credit Unions are the same as a commercial bank in terms of their services, but they are owned by their members rather than by profit-seeking shareholders.
  • They are non-profit Institutions, which means they use their earnings along to their members in the form of lower fees & borrowing costs & better customer service.

Borrow from family or relatives

  • The loan taken from the friends Or relatives must be formalized with clear documentation & recorded.
  • To avoid future problems, create a written contract that includes
    • The loan terms
    • Interest rates
    • A lender in giving loans.

Get a Co-Signer

  • If borrowing from relatives or friends is not working, you can still approach someone with good credit who trust your capacity to pay back the loan, you can ask him/her to be a co-signer on a personal loan from a traditional lender.
  • With a creditworthiness co-signer, the lender will set the loan terms based on the credit score of the person with good credit, who is equally responsible for the repayment of the loan.

Peer to Peer Lending

  • It is also known as individual lending.
  • It is a relatively new loan form.
  • Peer to peer lending is an online platform that allows you to borrow directly from the individual rather than from the institution but credit score is still a factor.
  • As individual investor has much greater leeway in how it is to be weighed these loans are often more readily avail for the people with bad credit.

Online personal loans

  • Technology has opened the door for the personal loan individual, a new industry that has created an option for people with low credit scores.
  • These lenders work online & offer competitive loans for home repairs.
  • Credit score plays a small role in the decision making process. This could be an appealing option if you have a poor credit score.
  • No credit or poor credit is a major hurdle when you go for a personal loan application because you are viewed as a high-risk customer and apparently bank doesn’t want to deal with such customers by leaving the lender holding a bag of worms.
  • Maintaining a good credit score is as important as submitting all the required documents while applying for the loan.