A personal loan is an unsecured loan that is quite popular among borrowers. While the personal loans are availed for varied purposes, the eligibility criteria to get the personal loan generally remain the same. Having good credit health plays an important role in securing a personal loan quickly. What if you do not have good credit health! How can you bag a personal loan with bad credit? Though the options are limited, you can still get a personal loan with bad credit.
How to get a personal loan with bad credit?
Any credit score of 750 and above is considered a good credit score. Don’t panic if you do not have a credit score less than that. The lenders do consider lending if you have less than a credit score of 750. Following are some of the options using which you can get a personal loan with bad credit.
Approaching Banks: There must be banks where you have a savings account, use their credit card, or had a loan account in the past, etc. You may have had a good relationship with the bank with respect to your transactional activities. Though you now have bad credit, the lend for all may agree to lend to you a personal loan, considering your valuable relationship.
Approaching NBFCs:There are several Non-Banking Financial Companies (NBFCs) that require only a credit score of 650 and above for base-level approval. You may apply through such lenders wherein you have higher chances of approval on personal loans with bad credit.
Peer to Peer Lender:These are online lenders who provide personal loans based on your income. Some of the lenders do not check your credit score and you can easily get approved on personal loans if you have good income.
Get a Guarantor: When your credit is poor, you may onboard a guarantor in your loan application whose credit score may be well enough to get easy approval on the personal loan. However, you must remember that the credit score of the guarantor will get affected if you fail to make on-time repayments on the loan.
Joint Loan With Family Members: Similar to a guarantor, you can also get a personal loan by jointly applying with a family member whose credit score can be used to get approved.
If you are unable to get a personal loan through the above options, you may have to first repair your credit and begin to apply for a loan in order to prevent a rejection which can further reduce your credit score.
Debt Consolidation Loan
Debt consolidation loan is a new single loan that is taken to pay off your several existing loans. This is a very helpful option especially when you are unable to manage several loans with regard to repayments, interest rate, and delinquency.
Your multiple loans such as student loans, personal loans, credit card bills, etc., with different lenders, can be paid off at one with this new loan. Instead of paying 5 or 6 times, you are giving out the same amount in a single payment to the new lender.
Debt consolidation loans help improve your credit health considerably after making consistent repayment. It is the best option to go for if you want to get out of debt sooner and change your bad credit history to good credit history.
You can check out lenders who offer these loans exclusively for people with bad credit histories. Though a debt consolidation loan is generally an unsecured loan, certain lenders may demand collateral if the loan amount is higher. Moreover, some lenders provide only up to a certain percentage of the overall amount required for the closure of all loans. The rest has to be borne by you.