Credit scores are often seen as the bad guy in your financial playbook because it always seems challenging to maintain a good one. While there’s some semblance of truth in there, a bad credit score doesn’t have to be the end of your story. Many people assume that low credit scores mean you can’t get credit. However, the reality is that with the rise of fintech, accessing credit has become much easier, and a poor credit score is no longer a major barrier.
That said, if you’re looking to borrow with poor credit, you may need to wise up about your financial choices, especially the type of credit you borrow. Choosing the right credit type and the right lender can make a huge difference in how you manage your financial challenges.
With new regulations to prevent predatory lending practices, you could borrow with greater confidence, even in an emergency. So if you’re wondering, “Can I get a loan with bad credit?”, the answer is a resounding ‘Yes!’.
In this article, we discuss what you can do to manage a rough financial patch better despite a low credit score.
1. Assess your Credit Report
It’s important to gain insight into why you have a low credit score and what you can do to improve it. Reviewing your credit report is a good place to start, as it has a wealth of information that can be incredibly helpful in rebuilding your credit profile.
Your credit report gives you in-depth insight into your financial accounts. This includes your expenses, how you manage your utilities, and all searches made by lenders against your report. It also includes how frequently you’ve applied for credit, any missed payments and lists all your open and closed accounts.
Reviewing your credit report can be beneficial from two perspectives. Firstly, it gives you a chance to spot any inaccuracies and rectify any errors. Secondly, it allows you to see where you can improve your credit score. So be sure to regularly check your credit report for a better understanding of your financial health.
2. Avoid High-Risk Borrowing
Although you can borrow despite a low credit score, it’s important to do your due diligence on credit options. This is because borrowing the wrong type of credit with a low credit score can be damaging. This is especially true in cases of emergencies where you need funds quickly to address a pressing situation.
Borrowing without fully understanding the terms and conditions of such loans can further send you on a downward financial spiral. Emergency loans and other short-term borrowing options can come with relatively high interest rates and are best avoided when you have a low credit score.
Instead, consider low-risk borrowing options that come with affordable and flexible repayment options. These include borrowing from direct lenders, non-profit lending institutions like credit unions or using a 0% interest credit card. These can help you manage your urgent expenses better without burdening you financially.
3. Choose Ethical Lenders Who Prioritise Affordability
You might be familiar with traditional lending institutions, such as banks, rejecting borrowers on the grounds of poor credit scores. This is because such lenders often have to comply with a complex organisational hierarchy and are generally risk averse. This makes their lending requirements rather stringent and impossible to access for those with low credit.
However, not all lenders go by this rulebook. A good example of this is direct lenders. These lenders, along with credit unions, often use a different approach distinct from traditional lenders. Instead of using your credit score, they use other parameters such as your employment history and repayment capacity. Sometimes this may also include gauging your character from your online social media profiles.
This is a more humane and personalised approach to lending, which you can benefit from when you have a poor credit score. As these lenders tailor their credit options to suit your financial situation, you can borrow with confidence and minimal stress, leading to a positive borrowing experience.
Conclusion
In today’s financial market, you can access a variety of alternative credit options to manage urgent expenses. However, as is the case with all borrowing options, remember to do your due diligence and consider borrowing only what you need. Borrowing from ethical lenders can ensure you’re able to manage your loan repayments comfortably, as they’re likely to have flexible terms and conditions.
You can even consider government budgeting loans, an employee salary advance or consider rebuilding your credit score with a credit builder loan. These alternatives can help you navigate your financial challenges better without exacerbating your stress.
We hope this article has been helpful and informative in managing your urgent needs, even if you have a low credit score.
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