Credit history, in simple words, can be defined as paper trails or rather a track record of your finances where a lender will be able to get a detailed idea about how you use and repay your credit.
If you have a spotless credit history, you would be eligible for a loan at any time while the opposite happens when you don’t have an impressive credit history.
How can you fudge up your credit?
You can have bad credit for a number of reasons. Some of them are:
- Missing EMI payments of repayments of debt on time
- Maxing out your credit cards
- Bankruptcy
- Foreclosures
Learn what the term ‘bad credit’ really means
Well, the definition of bad credit is relative since the credit scoring model varies from one lending company to another. But the baseline is still the same. Let us take a look:
- You have poor credit if you score 579 or lower
- You have fair credit if you score in the range of 580 – 669
- You have good credit if you score in the range of 670 – 739
- You have very good credit if you score in the range of 740–799
- You have an exceptional credit if you score above 800.
So who’s going to provide you with a loan even when you have bad credit?
The answer is simple – choose no credit check loans for bad credit offered by reputable lenders that work with people with a bad credit history or questionable financial stability.
But there’s a catch!
You would need to tread carefully and choose a loan scheme whose EMIs fit your budget. Furthermore, it is best that you read the fine print of the loan agreement before signing on the same.
Take your time and clear out any doubts you might be having about the terms laid out in front of you.
Things that you need to remember
Lenders have their own way of dismissing loan applications that mainly consist of cutoff credit scores. If a loan applicant falls below this cutoff, the lender will throw the loan application out of the window.
If you are lucky to have a credit score that sits above the cutoff score set by the lender, congratulations, you have successfully crossed the first hurdle. The next order of business will be your detailed credit history. Here the lender will factor other aspects such as your overall income per month or in a year, which credit scheme will work best for you and the interest rate that they will be imposing on your case and so on.
It is best to keep in mind that a traditional lending institution like a bank will take up your case given you have a credit score hovering in the 600s and provide you with a conventional loan.
Non-Banking Financial Companies (or NBFCs), on the other hand often ignore your credit score and don’t even bother to look at your financial history before offering you a loan. But bear this in mind that the interest rates will be sky high and the processing fees will be of a substantial amount as well.
After you get a personal loan, even with your bad credit score, work your way out of the situation by making timely payments for the best results. Remember, timely payments of your EMIs will improve your credit score drastically.
