When an emergency strikes, you may need urgent funds to cope with those scenarios. But what can you do if you have a bad credit score? Getting an urgent personal loan might be challenging and tricky when you have bad credit. However, you can still find some lenders who provide loans to people with bad credit under some conditions. These lenders typically require a substantial down payment or high-interest rates. If you have bad credit, it’s essential to look for lenders that offer loans with lower interest rates and lower down payments.
The following are some situations in which you can utilize an urgent personal loan:
You need emergency funds for a medical bill, home repairs & renovation, paying dues, etc. When applying for an instant personal loan with bad credit, there are a few things to remember. First, make sure you compare interest rates and fees from multiple lenders. Second, ensure the lender you choose is reputable and has a good customer service reputation. Following these tips can increase your chances of getting the urgent loan you need.
Credit Score & Its Importance
A credit score is a three-digit numerical value that mirrors an individual’s creditworthiness and credit behavior. Major credit bureaus in India, like Experian, Equifax, TransUnion CIBIL, and CRIF High Mark, provides credit score to each person by analyzing your credit transactions, including payment history, amount of debt you have, and length of your credit history. A higher score shows the responsible credit behavior of an individual. Eventually, it helps you to get better interest rates while requesting a loan from potential lenders and creditors. Credit score ranges from 300 to 900.
- 720 or higher – excellent
- 690 – 719 – good
- 630 – 689 – fair
- 629 or below – poor
Using Buddy Score check your credit score. A higher credit score will benefit you by getting a higher loan amount with low interest and your choice of repayment tenure. Eventually, it helps you to be eligible for an increase in your credit card limit. Therefore, paying your EMIs and monthly dues on time is mandatory, and any missed payment will gradually lead to a low credit score. Practicing a healthy habit of repaying dues on time helps to improve your credibility.
Steps For Getting An Urgent Loan With Bad Credit
Through some simple steps, you can easily avail yourself of an urgent personal loan with a bad credit score.
Widen Your Search -:
When you have a bad credit score, the chances of getting a loan rejection from banks are higher. Thus, you can go forward with a loan application through new ge NBFCs. They provide loans to people who have bad credit scores also. You might get a higher interest rate or a minor tenure for your loan. So when you need urgent loans and want a personal loan with bad credit, you have to broaden your search to know about all other sources.
Have a Good Relationship With lender -:
If you have a bad credit score, you can consult your bank or lender with whom you have a long relationship and explain yourself for getting an urgent loan for your emergency. They can help when you show them evidence of your income and job stability. Once they are on good terms with your repayment capacity, you can easily avail of a hassle-free loan.
Add a co-applicant -:
Despite having a low credit score, you can still apply for a loan online by adding a co-applicant with a good credit score. You can request your family member or friend with a stable income and responsible credit report. As a higher credit score lower the risk factor of your application, you can easily avail of a personal loan. Before approving your loan, lenders will verify your credit history, report, and income details to ensure they can pay back even if the primary applicant failed to pay back.
Opt for a smaller loan -:
If you have bad credit or no credit, it’s better to proceed with a small loan. Because it’s easier to repay the loan as the EMI and tenure will be less. Paying it back on time will gradually increase your credit score and benefit your future transactions.
Reasons For Decline in Your Credit Score
A high credit score is a plus point for everyone who prefers loans and credit cards. Particular things could lower your credit score if didn’t maintain it properly.
- Maintain your credit utilization ratio below 30%. By avoiding unnecessary expenses, you can save yourself from the struggles of monthly dues. Because one missed due can create havoc in your credit history.
- Only when you need extra financial support, then only go for a loan. Likewise, multiple loans from different lenders will negatively impact your credit score. Because whenever you apply for a loan, the lender will make a hard inquiry over your credit to decide your eligibility. So with more loans, more hard inquiries will follow, which is unsuitable for your credit score.
- Most importantly, if you opt for a loan and cannot repay them properly on time, it will eventually lower your credit score. A bounced check, too, can significantly impact your credit score.
Thus, frequent checks on your credit score will allow you to be alert about payments and can help you to know if any fraudulent activities have occurred in your account. It’s better to be cautious as there are increasing cases of fraud activities and reports.
Tips To Maintain Your Credit Score
- Never miss your payments.
- Maintain your credit card utilization ratio below 30%. Only during emergencies use a credit card, rather than using it for every payment.
- Get a mixed variety of credits like secured and unsecured loans.
- Don’t apply for multiple loans in a short time limit. First, research and compare, then choose the one that suits you.
- Stay active with regular borrowings and transactions in your credit. Check credit reports periodically to know the happenings in your history.
- Even if you choose a long-term and small EMI, you can pay your dues more than the maximum or can do prepayment to avoid more interests from piling up.
- You can manage your credit score with score builder loans, which are exclusively designed for new credit users with no credit history.
Note These Before Applying For An Urgent Loan
For getting an instant online loan approval, you have to take care of certain details.
- Eligibility Criteria: Before applying, know if you are qualified for the eligibility criteria mentioned by your bank/ lender.
- Credit Score: You must have a score above 700 to get qualified for the loan. Moreover, you are able to get low-interest loans with a high credit score. So, its better to be aware of your creditworthiness. Check your credit score using Buddy Score and get instant credit report.
- Documents: You have to submit valid documents such as Aadhar card, PAN card, passport, voter ID, bank statements, etc. while applying for an urgent loan. If you are an existing customer, then you can easily avail a pre-approved personal loan without documents as lenders will already know your financial ability.
- Debt-To-Income Ratio: Lenders analyse your debt-to-income ratio to know how you can manage your debts according to your current income. They can get to know about your loan repayment capacity.
- EMI: Before applying for a loan, make a detailed plan over the loan amount and how much you can pay monthly over a certain tenure. Thus, calculate the EMI you can afford per month without disturbing your monthly budget.
Avoid These Mistakes While Applying For An Urgent Loan
While applying an urgent loan with bad credit, you should avoid few mistakes to save yourself from any troubles.
- Loan Agreement: Without reading the complete application and “Terms And Condition”, you should not apply for a loan. It might create any legal issues in the future.
- Loan Amount: Choose the loan amount according to your requirement and budget, and decide the EMI you can pay. It will help you from any debt burden.
- Hard Inquiry: Avoid simultaneously applying for loans at various banks or lending institutions. The reason is that a hard inquiry is reflected in your credit report each time a lender checks your credit score. As a result, it will affect your credit score negatively.
- Loan Purpose: You must clearly understand the purpose of taking a loan amount. If you are not, you might take more than your actual loan budget and ultimately go under debt burden.
Financial emergencies can come at any time without a warning. During that situations, a personal loan will be helpful. You can get an urgent loan with bad credit score using the tips mentioned above, but you may have to pay a higher interest rates. Hence, you can increase your credit score by maintaining your credit for a better loan approval chances for future. Before apply a loan with bad credit, consider financial advices from experts to avoid any mistakes.
Will I get a personal loan even if my credit score is bad?
Yes, some lenders offer loans even if you have a poor credit score, but may charge you high interest rates. So to avoid this, it is best to improve your credit score by making timely payments, repaying your past dues and reviewing your credit report once a year regularly.