No problem ever comes with any warning. In such a situation, we should always be financially prepared. Many times we need financial help in times of trouble. In this situation we ask for money from our friends or relatives. We may also have to take a personal loan for a large amount. We all know that before approving any loan, the bank or financial institution checks our credit score. If the credit score is bad then there is difficulty in getting loan.
We will tell you below how you can apply for a personal loan despite having a bad credit score.
What is credit score? What is Credit Score?
Credit scores range between 300 to 900. It shows your past loan or debt repayment pattern. If the credit score is less than 650 then it is considered bad. At the same time, if the score is more than 650, the credit score is considered good. Having a bad credit score can make it difficult to get a loan, however, you can apply for a loan in an emergency. Otherwise you should improve the credit score before applying for the loan.
How to get a loan approved if you have a bad credit score?
Income Profile: You should make your income source good and stable. Apart from this, you should show the bank that you are capable of repaying the loan on time.
Secured Loan: In case of emergency, you should take a secured loan. This means that you should take a loan against fixed deposit or jewellery. In such a situation, the bank will easily give you the loan because the risk of default will be less.
Low amount loan: You should apply for low amount loan. The risk in a small loan amount is less and the chances of getting the loan approved also increases.
Guarantor: If the credit score is bad then you can make someone a guarantor. After having a guarantor in the loan, the chances of getting the loan approved increases.
Repay the loan first: If you already have a loan, you should repay it before applying for another loan. After repaying the old loan, your credit score improves and the chances of loan approval also increase.