A bad credit score can act as a hindrance for many people intending to borrow money to meet their financial needs. Life often throws at us circumstances that can lead to defaults in loan repayments causing our credit ratings to deteriorate. A significant proportion of Singaporeans juggle with bad credit scores and declining financial situation. What can you do to address the problem of bad credit and be able to get the required loan? The best solution is to apply for bad credit loans!
Let us discover all the ins and outs of this form of borrowing that can help resolve your monetary troubles even if you are ranking low in terms of your credit score!
What is the meaning of bad credit loans?
Bad credit loans represent specialized loan schemes that lenders design to meet the financial necessities of people with less than required credit scores or with no credit history. Most bad credit loans come with a more than average interest costs and other compliance conditions. However, they can prove useful for borrowers stuck in a debt trap with low credit ratings to improve their fiscal situation.
What does a bad credit denote?
The words bad credit imply that your credit history depicts a negative image before the prospective banks and lending institutions. It means that you can find it quite challenging to get your loan approved through regular routes.
The tag of a person with bad credit is associated with their performance on their credit score report. Most lenders including banks and licensed moneylenders view credit score as a yardstick to judge your credibility to meet your loan repayment commitments. In Singapore, the Central Bureau (CBS) and the Moneylenders Central Bureau (MLCB) provide performance parameters to estimate a person’s credit score. Traditional banks generally rely on the CBS based credit ratings. While, licensed moneylenders make use of the credit ratings as per MLCB. As per the Central Bureau of Singapore, a credit rating between 1000 to 1723 is considered poor with high risk for the lender. If you have a score in the above range, you are seen as a person with bad credit and a majority of moneylenders will be reluctant to lend you normal loans.
What aspects affect your credit score?
There is a culmination of different factors that ultimately determine the state of your credit score. Some of the most important factors influencing your credit rating are:
- Prevailing loan obligations
The amount of borrowings that you owe to your lenders and the extent of credit limit that you utilize every month largely impacts your credit score.
- Period of credit history
The duration for which you have been utilizing your credit also affects your credit score. If you have no borrowing history, lenders might find it difficult to trust you. Having some borrowing history gives one an edge to up there credit score.
- Repayment status
Your credit score is also a reflection of whether or not you manage to make payments in a timely manner. Defaults in your loan instalments and credit card debt will surely drag down your credit score drastically.
How can you enhance your probabilities of getting approved for bad credit loans?
There are different types of bad credit loans that one can find in the lending domain. However, with a bad credit score, you must take some precautionary measures to up your chances of getting the desired bad credit loan.
- File loan applications for a lower sum of money
The bigger the amount of loan, the greater the risk factor involved for the lender. You must try to limit the amount of loan as much as possible. It is recommendable to go for bad credit loans of smaller sizes in terms of the sum involved. The lending institution will be more keen to lend out a lesser sum to someone with a low credit rating.
- Consider loaning from a licensed moneylender
Licensed moneylenders act as a mix between banks and lenders from the informal sector. They do not have absolutely stringent loan processing and approval conditions like banking institutions and offer higher flexibility in terms of repayment terms or interest. However, they are also very reliable unlike any loan shark company. They offer different personal loan and bad credit loan plans for clients that can benefit you. Thus, you should contemplate choosing a reliable licensed moneylender while seeking bad credit loans.
- Do not go for a lot of loan petitions at a given time
Filing mass applications to get your loan approved with a bad credit score can send wrong signals to prospective lenders. If lending entities find out about your myriad loan applications, can grow suspicious of a possible financial distress and can also doubt your ability to repay your dues on time. It can ultimately result in the rejection of your loan application.
What are the warning signs related to loan scammers that you must realize while taking bad credit loans?
There are some peculiarities and indicators that can point out that you are about to deal with a loan scammer. The prominent ones include:
- The lender is unlicensed
- Loan dealings are undertaken on phone
- Lender does not pay much attention to your credit rating and history
- The name of the lending entity is similar to a reputed bank or loan company
Your ally to find varied loan options including bad credit loans- Tradition Credit!
A lawful and reputed licensed moneylender in Singapore, Tradition Credit is developing a loyal customer base with its quality services. We offer different forms of loans to meet your financial urgencies and have a simplified procedure for loan application. Our client-centric work approach make us a leading choice for your fiscal needs. Get in touch to discuss your loan requirements now!