It is important that you take care of your credit rating as this will impact your ability to take out a personal loan in the future. Unless you have a good credit score, you are less likely to qualify for a loan. This is why you need to do your best to protect your credit by making prompt payments and avoiding any situation that can seriously hurt your credit health.
Unfortunately, not many people are able to do this due to some inevitable situations they encounter in life. For instance, sudden illnesses or being laid off your job can leave you greatly concerned about your finances. When these things happen, there is a strong need to obtain extra cash for your personal expenses. But with a bad credit, the whole process of taking out a personal loan from banks or licensed moneylenders can be tougher than you think.
This is why if you find yourself in a difficult life situation, and you need a certain amount of money whether it is due to a catastrophic incidence, a personal loan can be your saving grace. You can obtain some funds that may be used for your urgent expenses. Then again, what will happen if your credit score is not exactly ideal based on the standards of a moneylending institution?
The following are among the things you may consider doing if you are hoping to receive a positive response from your loan application.
Try Applying for a Smaller Loan
While it may seem almost impossible for you to borrow a large amount of money from a bank when your credit is in not in such a good shape, there is still a way to go around this issue. Some people decide to try their luck in applying for a smaller loan when they are aware of their existing credit rating. But then again, this is still a risk since you need to be more consistent with your attempts of improving your credit.
A practical solution is by applying for a small amount of money. In case you are able to qualify for the loan, you need to be dedicated to repaying the money on time. This is a sure way to slowly heal your credit rating, which can make you more eligible for larger loans in the future. Never miss out on the due dates of your loan and make sure that each payment made is in full instead of just giving the minimum amount. Your primary focus must be on keeping with the set repayment schedule. Once you have shown a strong evidence of your capability to repay your debts, then banks will soon start to notice your efforts and consider you as a favorable candidate for a loan. The most important thing is that you borrow and repay the small loan as you build your credit score slowly. This may take time, but as long as you are consistent with your efforts, then you should build a positive image to banks and make you more capable of obtaining a larger loan.
Restructuring Existing Debts
If you have a poor credit score, this often reflects the fact that you have existing unsecured loans. This may be the case with you, so you need to start working on repaying your outstanding debts to make yourself more eligible of a personal loan. But the big question in your head may be this – “How and where do I start?”
If ever you think that you are unable to repay all your existing debts, you may try to talk to your banks to discuss some options available for restructuring your debts. One thing you may consider is working with your bank with the hopes of reducing the interest rate they charged you on the present amount you owe them. Then, there is the option to negotiate with them a longer period for repaying your debts, which may lower the sum of money you have to settle monthly. This is one way of helping you in keeping up with the payments.
There are additional means of restructuring your existing debts. This may include consolidating your loans or doing a bank transfer. Approaching a Credit Counseling professional in Singapore may also help when you need further assistance once you are ready to meet with your banks for debt negotiation concerns. So, why is it important to restructure your debts? For the most part, this allows you to slowly pay down your loans without facing the risk of getting into deeper financial problems. It will also do you good on a psychological level since it can get very stressful knowing that you have a massive amount of debt.
As for the impact on your credit rating, being able to pay off all your debts can improve your reputation with banks. You can rebuild your creditworthiness, along the process of your clearing all of your debts. Overall, it is a win-win situation, but mostly for your sake. By settling all of your loans, your credit score will become much better. Then, you will become more eligible for larger loans in the future.
Seek the Assistance of Non-Bank Financial Organisations
It is not just a bank that you can count on for your financial concerns. In fact, there are numerous options available when you need to borrow some money to pay off your immediate expenses. A non-banking financial organisation, for instance, can help you wil your pressing money concerns. Some of these include the Singapura Finance or the Hong Leong Finance. These are some companies that are registered and recognised by the Monetary Authority of Singapore. You can select from a variety of loans available that will meet your financial issues.
But you have to keep in mind that these companies also look into your credit rating before you are granted a loan. This is their way of assessing your risk and eligibility as a borrower. The main reason behind this is the fact that they offer an unsecured loan. Thus, they have to protect their business by making sure borrowers are able to settle their debts on time.
Another thing to consider is that finance companies tend to have varied risk appetites. They also offer a range of loan packages with interest rates that may be a little higher than usual. But then again, you may qualify for these if your credit rating is less-than-perfect.
Consult a Licensed Moneylender
As a final resort for taking out a loan even with a bad credit, you may think about approaching a licensed moneylender for assistance. In Singapore, there are numerous moneylenders that you can go to for your money issues. The interest rates they charge are also quite high, and these may go from 4 percent to as much as 15 percent monthly. So, repaying the loan may be a little tougher.
Moneylenders operate a high risk business with a high reward venture. This is the reason why they only offer smaller loans such as low income personal loan, quick payday loan, and even fast approval foreigner loan to borrowers. But at the same time, if you have a smaller loan, it may be easier for you to repay it. The only thing you have to factor in is the higher interest rate.
Since you can only qualify for a small amount of money, it may be almost difficult to cover all your needs with the minimal sum of cash you receive from a lender. Then, the interest rate is also high, which obviously is an evident disadvantage on your part.
If ever you decide to approach a moneylender, make it a point to deal only with licensed ones. Check the license and business permit, so you can prevent greater problems that come with working with an illegitimate moneylender who may only pressure you and create further stress on you each time you miss making payments.