How To Get A Loan With Bad Credit
For most individuals, a bad credit score has become a stumbling block for them to accessing loans. This is because they are seen as high-risk clients who may default or also have late repayments of their loans. Even then, it is important that you understand some of the factors that will affect your credit score and ways in which you can build it. Even under such circumstances, you will be surprised to find out that you can still get loans even when you have bad credit.
When you have a bad credit history it can be a roadblock for you when requesting for loans from traditional lenders, like banks in Singapore. Although you will be required to raise the credit score, this may be a temporary blocker. The good news is that there are other methods that you can use to get the funding you want in legal ways.
How You Can Get Your Credit Record
The Singaporean Credit Bureau has made it possible and convenient for individuals to get a copy of their credit reports. The credit report can be purchased online at a fee of $6, or you may get it at no cost if you have presented a credit request to any one of the Bureau’s partner members. There are several factors that may affect your credit score. These include any earlier late payments, bankruptcy records, how many credit facilities you may have, and if you have recently requested for several lines of credit. All these factors may contribute enormously to you getting a bad credit history.
Make a note that your ability to access a loan doesn’t only dependent on your credit score. Most banks in Singapore normally look at the salary level, your application documents, the existing banking relationship you have, as well as the money lender’s risk desire.
If a bank has recently turned you down for a personal loan, it may be the time you considered several other alternatives listed below:
Legal Moneylenders Help Individuals With Bad Credit
You need to check whether a certified money lender holds a valid license before you search for a loan from them. Taking out loans from an illegal moneylender in Singapore is an offence plus this can put you in very serious trouble. Certified moneylenders available in Singapore are a great choice for you to get a loan as opposed to a bank. Additionally, the legal moneylenders are under regulation by the Singaporean government. This means they have to follow strictly the set guidelines on the amount of money they can loan an individual, as well as the rates of interest they are able to charge on loans.
Given that you have in the past taken a loan from a legal moneylender, it’s important to note that your credit record will be filed with Moneylenders Credit Bureau too. Therefore, if you have in the past defaulted on your payments for the loan you may have a bad credit history. The Credit Bureau for Moneylenders’ is a storage area of all factual information regarding all loan requests and repayment records that are held by licensed moneylenders within Singapore. Therefore, given that you have defaulted in the past or any late repayment with a licensed moneylender, your loan request may be turned down.
As a result, it’s important that ahead of taking on any form of a loan, you ensure that you are able to repay it within the set time frame. This is will also ensure that you have access to loans in future when the need arises.
Get A Guarantor
If it is difficult for you to get a loan, it may be the time that you considered getting yourself a guarantor. Your guarantor can either be a friend or a family member who understands your situation and trusts you enough for them to take on responsibility for repaying your debt. This can particularly be true when you have a student loan given that students might not have regular earnings to help them pay off their outstanding loan.
It is for that reason that there is the requirement for a parent and also a guarantor to make sure that someone is able to take on the liability for paying the loan in case the student does default. When you opt to get a guarantor, make sure that you make regular repayments. Also, remember that any late payments will go towards hurting your guarantor’s credit score.
Take Out A Home Equity Credit Line
If you as of now own a private property and its valuation has been on the increase in the last several years, it is then possible for you to be able to get a home equity loan. This loan facility will help you free up some ready money. Usually, home equity loans cost almost as much as mortgage loans, which have a much lower interests fee when compared to having a personal loan.
Nonetheless, you need to bear in mind that any default on the home equity loan, you will be putting your home at risk. This works pretty much like the mortgage. In order for you to avoid this from happening you will have to be very punctual with your loan repayments. But when you have a steady income and you are disciplined on the repayment of the Home Equity line of credit, it is a much cheaper loan option.
Get A Loan From Your Friends And Family
When you are still not able to access a loan using the three above mentioned options, the fourth option would be to borrow some cash from somebody you know. Borrowing money from friends or family or is a bit tricky since it can cause a strain on the relationship should you fail to repay the money. You need to carefully keep that in mind before doing so. For you to preserve these important relationships ensure you have a properly drawn loan agreement indicating the regular repayments to help avoid any disagreements.