We will all suffer from financial worries over the course of our lives, and sometimes due to our circumstances, we can end up with low credit. Having low credit can be difficult if you’re applying for a loan in an emergency, or you’re looking to be approved for a mortgage – but thankfully, it doesn’t mean you’re out of options. Merchant cash advance companies and payday loan lenders offer personal and business loans based on affordability rather than credit score.
If you’re looking to be approved for a loan with low credit, here are a few tips to improve your chances, as well as your financial situation.
Why is credit important?
Good credit is essential when it comes to many of life’s important milestones. Your credit score determines whether you are approved for a loan – that can be anything from car finance to a mortgage or business loan.
The better credit you have, the more you will be able to borrow. This is due to the lender reviewing your credit score and deciding your creditworthiness. It helps them to weigh up the risk that comes with the loan.
If you have poor credit, the risk for lenders is higher, as they can see in the past that you have struggled to make repayments. This doesn’t necessarily mean that you won’t get approved for a loan, as some companies still lend to those with poor credit – but it does, unfortunately, reduce your chances.
Can you get a loan with low credit?
In short, yes! If you have low credit and you need a loan to help with an emergency expense, don’t panic – there are still ways that you can borrow money and there are lenders out there that will base their decision on affordability, rather than your credit history, especially if you have a steady income and can afford to make the repayments that they are proposing.
Again, this is all based on individual circumstances, and if you have very bad credit, you may not be approved, but searching for lenders that provide loans for bad credit can still be helpful.
Make improvements
If you’re thinking about applying for a loan with bad credit, try and work your way to the best position you can by improving your credit score. There are simple things that you can do from getting on the electoral roll – showing lenders that you have a stable address and you’re not moving around too often, as well as making sure you’re paying your bills on time. You could set up direct debits so that you don’t even have to think about it.
Another simple way of making improvements is to check your credit report is correct. This report shows lenders your credit history, and sometimes there can be errors made. You can contact a credit report provider to make sure it’s up to date, by doing this your score could improve too.
Compare loans
As previously mentioned, there are lenders that will allow you to borrow money from them if you can afford the repayments. Choosing a platform to compare loans and lenders is a great way of finding the best deal for your circumstances.
Make sure the websites that you use perform a soft search, so as not to be recorded on your credit report, and you can choose between the loans with the best repayments and interest options.
Improve affordability
When applying for a loan with low credit, lenders will decide if you can afford to pay back the loan, as well as any interest they are offering.
To improve your chances of qualifying for a loan in your time of need, you can improve your affordability to show you can repay the money borrowed. You can do this by choosing to borrow less, for the time being, cutting back on your monthly outgoings, especially on non-essentials, as well as looking at ways to increase your income.
Improving affordability gives you a better chance of being approved – cutting back your outgoings and overheads is a good way of showing your chosen lender that you can be trusted to pay the loan back.
