Life is full of surprises and we cannot figure when tough times will hit us. Sometimes a situation comes where we need to borrow in order to handle any financial crisis. Yes, there will be plenty of options in front of you, but getting a loan is not easy than it may sound. Most of the banks and credit unions become very choosy when it comes to lending money. Also, gone are the days when accessing credit card was easy as today the credit card providers follow strict norms and regulation.
There are several factors that any banks or credit unions take into consideration when a person applies for a loan before the approval. Among all, the most important one is the credit score of the borrower. Basically, a credit score is the three-digit number that helps the lender to analyse the borrowing capacity of the person. If you have a good credit score, then chances of getting the approval of the loan increase dramatically. And somehow, your credit score is bad, then it gets really difficult to get a loan. Now let us see how this scoring is done.
- Excellent (961-999): The person with such a credit score will be offered the best deal in the loan industry.
- Good (881-960): It will be easy to get most types of loans but don’t expect interest rate that you will be offered as same as the person with excellent ones.
- Fair (721- 880) Person with this credit score can get a loan with a decent interest rate. However, the lender might see other factors such as your income status, past debt records and others before approving.
- Bad (561-720): There will some problems on getting loans with this credit score. And if the loan is approved, the rate of interest offered to such borrowers will be quite high than others.
- Very bad (0-560): Most of the banks and credit unions will reject the application form of the borrower whose score lies in this range.
Is it possible to get a loan with a very bad credit score?
If your credit score is really sinking below, then chances of getting loan approval are very low but still, there is hope. Yes, you heard it right! There are many private lenders in the market who provide very bad credit loans with no guarantor and no broker involvement. However, the lender may charge a really high-interest rate and may even ask you to provide collateral. Now let us see the advantages of such loans.
Benefits of very bad credit loans that you might not know
- No more worry about your credit history
As you have applied for a loan already, then you must be well aware of the fact that any banks, credit unions and other financial institutions go through the credit profile of the borrower. But, there is no reason to worry about such things, as the lenders will not consider it before approving the loan. Hhh owever, on such loans, the lenders will see the repayment capacity of the borrower.
- Quick Approval
Another great benefit of getting such loan is that you can get the requested amount within a few hours of the approval. Well, this is not the case with other convention loans which are quite difficult to get and also takes a long time verification process for the approval. You will be surprised to know that the approval rate of these loans lies in the range between 80-90 percent and that is really high.
- An opportunity to improve your credit score
One of the major reasons why you were facing so many difficulties in getting a loan is your terrible looking credit score. However, applying a poor credit loan gives you a golden opportunity to improve your sinking credit score back on track. This will give a little boost to your credit score and will help in removing the stain that has been stopping you from getting a loan from any financial institution.
- Possibility to get a larger amount of loan
If you are in a need of a large amount of money but for a shorter period, then very bad credit loans can be an ideal choice for you. However, keep this thing in mind that you may have to pay a higher amount of interest if you are applying for a large amount of loan.
For the people who are not able to get financial help from any institution, loans for bad credit no guarantor on benefits . are like a light at the end of a tunnel. The lenders who provide such loans require no guarantor but may ask to provide something as collateral and charge a higher interest rate. So, if you are planning to apply for one, make sure that you have a clear idea about this loan and are ready to take the risk.