Bad credit might not be good, but it doesn’t always have to be bad!
The tough reality when you’re an individual who's managed to rack up a record of bad credit is that the larger and more familiar lending institutions are not in a hurry to help you with a loan. In fact, more often than not they will decline your application based on the simple reason that you come with high risk.
That said, if you are someone with a poor credit history, there’s no need to pout because there are plenty of non-traditional lending institutions and online loans that noticed this gap in the lending industry and made it their mission to design loan offerings that would help the unfortunate individuals who had nowhere to turn.
These new lending companies and loan products are specifically tailored to meet the needs of citizens of South Africa that have a bad credit record. Though it’s not always the cheapest option, it’s still an option! You didn’t have one before and now you do, which is far better than feeling alone when you’re in a position that calls for a helping hand.
Don’t feel as though you’re the first person reaching out either! There are many like you, therefore there are perfected processes by experts in the industry that can offer the advice that’s needed when you take that step to apply for a bad credit loan.
How bad is my record? Do I even need a bad credit loan?
You might have missed a payment or two, or perhaps have a few credit cards, an overdraft and a couple of retail accounts that might appear to you as “bad”. The last thing you should do is to assume anything regarding your financial situation. If you have never been handed over before by a company that you owe money to, or have no blacklists on your name, it’s imperative that you first attempt to know your score before fretting over applying for a loan!
Bear in mind that if you are already under the assumption that you could have a poor credit record, chances are that certain lenders might be under the same impression, while others might not. In other words, not all non-traditional lenders have the same stringent rules in place. It’s still a good idea to request a credit report to know where you stand financially.
How do I go about obtaining a personal credit report?
Thanks to the technology and the wonders of the internet, we are able to do this online just as with most things these days. There is a multitude of online websites that will assist you to obtain a personal credit report. You just need to go online and look for a site that will link to the credit bureaus. Most of them will ask you for your brief personal details, namely your contact details and ID number to be filled in on an online form, at which point you will receive communication.
This report with furnishing you with all the insight and information that you need to ascertain whether you have good creditworthiness or bad. Go through it with a fine-toothed comb and ensure that all the details and information is correct. I’m sure any of us would hate to know that there might be false information out there that could directly impact our ability to take out any future personal loans or lines of credit
When applying for your bad credit loan, take the following into account:
- APPLY THROUGH a number of lenders as this won’t further impact your credit score initially, however, you might just land yourself a really good deal of interest and find a lender that perfectly matches your needs
- BE WARY of applying through too many over an extended period of time, as this could end up counting against you
- AT ALL COSTS – avoid loan sharks! They do not have your financial interests at heart and will loan you money simply on the premise that they will make money out of you, not to mention that they’ll come with the priciest of interest rates to top it all off
Advice on comparing bad credit loans
For starters, make sure you do a thorough comparison. Not just between one or two either, through all of them, since many different companies have different lending policies, interest rates and criteria that need to be met.
Use a comparison tool that allows blacklisted individuals to actively compare the pros and cons of each lender. Some lenders might even offer a pre-approved loan without having to perform a very thorough credit check - this is almosy always true in the case of payday loans.
Just remember that a credit check that results in a lender declining your loan application can severely count against you as opposed to having avoided the check in the first place. Make sure that you choose the right lender when comparing!
What are secured loans and how do they help?
This is a separate strategy altogether, albeit one to consider if you have bad credit. Remember, it’s not always a guarantee that you will obtain a personal loan for bad credit, simply due to having bad credit. There are a number of criteria that you need to meet, especially when dealing with a registered lender (which is always recommended).
So, what is the alternative you ask? The better question to ask yourself is, what assets do you have that could potentially be used as collateral? If you have collateral that could act as a form of security for a loan, then the likelihood of you receiving a personal loan or short-term loan is far higher than before! What that essentially means is that you wouldn’t even need to apply for a bad credit loan, you could use your collateral to obtain a more traditional general loan. The only con with this scenario as opposed to a bad credit loan, however, is that should you fail to pay it, your asset will be repossessed. Grandad’s old Buick in an auction lot is sure to upset a number of family members when you miss the payments due to having chosen this route.
The proof, however, is that the interest rates are far more attractive that than unsecured quick loans which qualify you based on the availability of security. It’s a no-brainer really! Well, if you never really liked the Buick anyway. Otherwise, it’s something you seriously need to consider as risky due to the loss you could incur.
Some last minute financial advice to ponder over
Take the time to cross your T’s and dot your I’s. Do a few calculations and ensure that you are fully aware of the monthly instalment you have now committed yourself to paying until settlement. Money doesn’t’ grow on trees, and it certainly hasn’t started since you decided to start doing the right thing with your bad credit.
In other words, take a look at your income and ensure that you have a healthy surplus left over of disposable income. If you do, you’re A for away! If not, don’t feel bad to look into other options such as debt consolidation loans and debt couselling to help ease the load. Just make sure you’re making the best one for you and realise that you’re not alone if you’re blacklisted or struggling with a bad credit record. There are lenders out there standing by ready to help you.