When faced with the need for some extra funds or immediate cash, most people overlook a loan option. Borrowing a loan is often viewed as a tiresome process that involves collateral and a lot of paperwork. People are also worried about the interest rates and the tenures. To avoid any of these, most people do not consider borrowing a loan. A great solution to this issue is a personal loan.
A personal loan can be borrowed either online or offline and entails a hassle-free process. No collateral or guarantor is involved and you would not require a lot of documents to have your loan approved. The interest rates are comparatively low and the loan can be easily repaid within a short duration of time. You need not specify your reason for borrowing and can spend the borrowed amount as per your needs. The best part of borrowing a personal loan is that you can get your loan instantly approved and get the required amount even in case of an emergency.
The eligibility criteria for borrowing a personal loan are very simple to meet and with very few readily available documents you are eligible to apply for the loan. One of the few things to be considered well before applying for a personal loan is your credit score. A credit score is a new term to most borrowers and hence they might find it difficult to understand the same. In case you are borrowing a loan for the first time and have no idea about how credit scores work or how they influence your application, you are at the right place. This article will discuss personal loans for bad credit, how to apply for a personal loan online with bad credit, and how to improve your credit score.
Table Of Contents
The following topics can be read about in this article:
- What is Loaney?
- What is a bad credit score?
- Common causes of a bad credit score
- Steps to pre-qualify for a personal loan for bad credit
- Things to consider while taking a personal loan for bad credit
What Is Loaney?
The internet and online facilities provided by different services have made life easier. Like all other essential services being made available online, personal loan borrowing has also gained momentum in the online world. Borrowing personal loans is no longer a long procedure or waiting in queues or handling a lot of paperwork.
Loaney is an online platform that offers instant personal loans to its clients at low interest rates for a shorter duration of time. The platform offers a seamless procedure for the application and approval of your personal loan for bad credit. You do not need to submit collateral or present a guarantor or even specify the reason for borrowing the loan. The website ensures the confidentiality of your information.
Loaney offers a personal loan of up to Rs. 20,000 to its clients for a duration of up to 2 months. All you need is your Aadhar card, PAN card, Bank account linked to your mobile number, and a passport-sized picture. The entire procedure from application to withdrawal can be completed from home within a few clicks and in no time.
Let us now dive into credit scores and how to get a personal loan for bad credits.
What Is A Bad Credit Score?
Before we look at what a bad credit score is, let us look at what credit score is, what determines credit score, how it is assessed, and the impact of a credit score.
A credit score is one of the most important criteria asses by your personal loan lender. It helps the lender in judging whether you will be able and willing to repay the borrowed amount or not. The credit score is a history of your previous credit and borrowing-related activities that help the lender in determining if you are worthy of borrowing and repaying another loan or not.
TransUnion CIBIL Limited assigned the credit score, one of the four credit rating agencies in India. It was previously known as the Credit Information Bureau India Limited(CIBIL). TransUnion CIBIL maintains a record of the credit-related activities of individuals and companies that includes details about credit cards and loans borrowed by the people and the companies.
The CIBIL Score is a three-digit number that is the reflection of the previous credit or loan-related activities of a person or a company. This score represents a summary of your credit history and credit profile. The minimum CIBIL score is 300 and the maximum is 900. A higher and better CIBIL score improves your chances of getting a personal loan approved. A CIBIL score of less than 750 is considered to be a bad CIBIL score.
Common Causes Of A Bad Credit Score
Now that you know about bad credit scores, the next question on your mind would surely be what is the cause of a bad credit score? Let us look at the causes of a bad credit score.
The following can be the reasons for a bad credit score:
- Delayed Repayment: Delaying your credit card payments can be a major reason for a low credit score. Even a slight delay of a day or two can cost you your credit score. As the number of your delayed payments increases, the negative impact on your credit score goes up.
- Missed Payment: Missing payments on your previous loans can be another red flag. If you miss an installment of your loan, it makes your credit score drop.
- Lack of Credit History: Not having any credit or loan-related activities in the past is also not the best way to have a good score. If you haven’t borrowed a loan before or have no credit card account, you might have a bad credit score.
A credit score of 750 is considered a good credit score. Anything below 750 is a bad credit score. It can be difficult to apply for a personal loan with bad credit. In the following sections, we will look at how to apply for a personal loan online with bad credit and the factors to consider while doing so.
Steps To Help You Pre-Qualify For A Personal Loan With Bad Credit
From the above information, you can conclude that a credit score is an important criterion to be met and it determines whether your loan will be approved or not. But one of the points to ponder upon could be if one could get a personal loan with bad credit and if yes, how to get a personal loan for bad credit?
A bad credit score does not mean that you will not be able to apply for and borrow a personal loan. The procedure might be difficult and you might have to face a few challenges to get a personal loan with bad credit.
The following steps can be taken to apply for a personal loan with bad credit:
- Assure your lender that you will are capable of repaying the loan and will make timely payments.
- Apply with a guarantor that can back you up. Make sure your guarantor has a good credit history and payment records.
- Ask for a lower amount.
- Offer to submit collateral.
Things To Consider When Taking A Personal Loan For Bad Credit
You must keep the following points in mind if you apply for a personal loan with bad credit:
- Explore various lenders and loan options before choosing a personal loan offered at a low-interest rate.
- Check the eligibility criteria of the loan-providing platform and make sure your application does not get rejected.
- Ensure your ability to repay the loan amount before applying for the same.
As we conclude this article, you would have learned how to get a personal loan with bad credit, what makes a bad credit score, and what to keep in mind while you apply for a personal loan with bad credit. We hope the article has helped you understand in detail, bad credit scores and you will now be able to make the right choices while you apply for a personal loan online with bad credit. Further, we have answered a few frequently asked questions for your convenience.
1. What is the easiest way to get a personal loan with bad credit?
Credit scores are assessed by most personal loan providers. If you wish to borrow an amount up to Rs. 15,000 then Loaney can be a good option. It offers the best personal loan at low-interest rates. Loaney does not ask for your credit scores, collateral, or a guarantor. All you need is your PAN card, Aadhar card, passport size photo, and bank account with net banking linked to your mobile number. Loaney offers a completely digital process that is seamless and helps you get your personal loan approved with just a few clicks within a few minutes from the comfort of your home.
2. How can I raise my credit score by 100 points in 30 days?
Increasing and improving your credit score is not a difficult task. You need to be mindful and punctual in making your payments and repayments while staying within your credit card limits. The following steps will help you improve your credit score by 100 points in 30 days:
- Getting your credit report.
- Identifying the negative accounts.
- Paying off the credit card balances.
- Eliminate the negative accounts.
- Paying your bills on time.
- Paying off debt instead of transferring it.
- Not closing paid-off accounts.