The ‘bad credit’ is the most talked about term in the community of borrowers because the credit score is the most important aspect that decides the possibilities of loan approval and offered interest rate. Everyone knows about this term, but very few know it – what it is in reality; most borrowers know just the limited as taught by the lenders with an intention to charge high-interest rate. Everyone understands your emergency that bad credit loans are costlier but knowing all in this context may save for you considerably by helping to get a better-priced deal.
The Clouded World of Credit Score Ranking:
Different banks, credit reference agencies and lenders score the credit ranking in different ways. Even the same bank may assess different credit score when you apply for different loan types. The credit scoring for credit card application is different than the credit scoring for a mortgage loan. The higher the credit score, the better would be the offered deal. Higher score entitles you for better interest rate loan. Experian and Equifax are the leading credit reference agencies. If one lender rejects your application very fast and quick because of a low credit score, you may apply to others because that may not be using the same method for credit score assessment. Each CRA states the excellent credit score band on their portals:
- Good Experian score starts from 700; 800 is considered excellent.
- Good Equifax score starts from 660 and above.
- Good Noddle’s credit score indicator is 3 on its 1-5 rating.
What is ‘Bad Credit’?
Numbers of factors contribute to credit score ranking. According to Equifax, 280-379 is a poor credit score. According to Experian 561—720 is a poor credit score.
The credit score chart for Equifax:
0—279 Very Poor
280—379 Poor /bad
The credit score chart for Experian:
0—560 Very Poor
561—720 Poor /bad
So, what is a good credit score?
- 881+ with Experian
- 604+ with Callcredit
- 420+ with Equifax.
What are ‘Bad Credit Loans’?
These are the variety of loans specially designed for bad credit borrowers. These are short-term personal loans given as small amounted instant loans financial help. The borrower is free to use the borrowed money in his own way; the lender is concerned only for the timely payment. Because of involving high risk, these are often offered at a higher interest rate. A bad credit score is taken more as the circumstantial development, not as the borrower’s intention for not paying the debt.
Types of Loans for Bad Credit:
Different types of bad credit loans are available at different loan stores; the user defines the name typically. For example, bad credit personal loans may be – car repair loan, home repair loan, illness loan, consumer loan etc. The bad credit loan may be secured and unsecured both. The loan can be secured by presenting a guarantor or placing some assets; the secured loans are cheaper than unsecured loans. However, obtaining a small amount in cash of loan may not be feasible.
Why Do I have ‘Bad Credit’?
Numbers of factors influence credit ranking. Payment history, credit use history, credit mix, credit utilisation rate, hard inquiries, number of accounts, negative information are some critical factors that drive you for having a bad credit score. Closing the numbers of credit account at once reduces the total credit available, it affects the credit utilisation ratio. Opening new credit accounts in brief period affects the credit score in many ways because the initial account efforts generate some hard inquiries aligned to credit applications; this action is taken as the efforts for getting more debt. Using only one or two credit cards is ok, but if you are using multiple credit cards, it is going to hurt your credit ranking. The other factors contributing to worsening of credit score are bankruptcy, CCJ, foreclosure, voluntary surrender, repossession, settled accounts, an involvement of collection agency, charging off the debt, missed payments etc.
Why Do People Need Bad Credit Loans
As said earlier, the loan applications of bad credit borrowers are turned down by the regular mainstream banks because of high-risk involvement. Direct lenders are accepted bad credit loans and come forward to help the bad credit borrowers by offering a variety of loans but comparatively at a high cost. As the living price remains almost the same even after having poor credit report because of any reason, no other way is left to revive the financial condition rather than getting instant decision bad credit loans from a private agency. A payday loan is the most sought after same day instant decision bad credit personal loan type because it is approved by monthly salary.
FAQ About Bad Credit Loans
How can I get a loan with bad credit?
The bad credit score doesn’t debar you from getting a loan. Although you have limited sources because regular banks or financial institutions will hardly approve your loan application, but you have numbers of options to choose the best direct lender. Getting a loan with bad credit is simple; just fill up a simple online form and wait for 20-30 minutes for the response. Once you understand, negotiate and approve the proposal, an amount is credited to your account the same day payout or by the next day.
Where to get a loan in Ireland with bad credit?
Direct lenders and credit unions are the primary tow sources to get a loan in Ireland with bad credit. You have to be a member of a credit union. You can apply for additional benefits also. Lendinvest -founded in 2008, Liberis -a business-friendly lending company, Fleximize – a trustworthy direct funding company, Invoice Cycle- financing against outstanding invoices, RateSetter- personal loan specialist agency, Many lenders in Ireland- prominent government registered lending agency etc. are just the few to name sources to borrow even with bad credit score.
Can I get a bank loan with bad credit in Ireland?
Getting a loan from a mainstream conventional bank while having a bad credit score, is almost impossible unless you have some assets of fair market value to mortgage. Arranging a financially strong guarantor with deposits in the same bank also keep the chances of bad credit loan approval open at least if not closed at all.
How can I Improve my Credit?
- The borrower with 680 credit score has a revolving balance of 40%-50% of total credit card limits. The borrower with 780 credit score has a revolving balance of 15%-25% of overall credit card limits. Therefore, by paying 30% of the revolving balance of credit cards, you can improve the credit score by ‘100’.
- 30 days late payment dents the credit score up to 60 – 80 points; 90 days late payment dents the credit score 70 – 90 points. Call the creditor to settle the pending amount by negotiating and pay it completely.
- If you find even the small amount bad entry incorrect, ask the CRA to correct entry.
- Generally, people with 780 credit score do not have a collection account. If you have the one, negotiate with a collector for “pay for delete”.
- You may ask the credit cards issuers to raise the credit limits with soft pull inquiry; soft inquiries don’t appear on credit report. The increased credit card limits lower your revolving balances even without needing you to pay.
- Charge the inactive credit cards with a small amount. Charging even a tiny amount to credit cards delivers the credit mix benefit.
- Some credit accounts are required to have a credit report meaningful for the lenders. An absence of repayment record of debts goes against the borrower. The promising borrower needs to have at least one 6 months old revolving account.
Different ways are suggested online to improve the credit score, but the only mantra is to pay all the dues on time and never commit these mistakes:
- Applying for multiple credit cards issued by the leading brands and shopping outlets as promotional offers.
- Delaying even the small payments that you can pay but you don’t pay to take this payment worthless.
- Using the maximum usage limit of all the credit cards; never use the credit limit more than the 50%.
- Living with revolving debt that is the result of an unsecured line of credits.
- Using only one source to get debt. Getting small personal loans from different lending agencies and on the time payment improves the credit score.
- Closing multiple Credit Cards within a short period. Whatsoever may the reason is for doing so, closing of multiple credit card accounts dents the credit score.
- Failing to pay taxes on the time. Never let this happen because each failure is reported to CRA and your credit comes down.
- Having mortgage loan delinquency. Never let it happen at any cost because it demolishes the credit reputation for several years closing all the options of getting reasonably priced affordable personal loan.
Everyone knows that bad credit loans are costlier and tough to get as well; still, many of us have a bad credit score. By being a disciplined buyer with a long-term objective oriented financial plan, you can rebuild the ‘poor credit score’ to be at least ‘good credit score’. Don’t lose confidence once having the bad credit report; you can turn it into a good statement within a few months for fresh borrowing.