How to Get a Loan With Bad Credit History
It can feel like the end of the line and the end of your dreams when a bad credit history comes back to haunt you. Fortunately, you’ve got a variety of choices at your fingertips, explains Adelaide finance broker Dom Cassisi.
Why bad credit is an issue
Bad credit is a threat to lenders.
Any sign that you haven’t done well paying off debts, loans or bills scares other institutions away from taking a chance on you.
You understand this well enough. But here’s where a new problem for you comes in: circumstances beyond your control have tarnished your credit and there’s nothing you can do about that.
Identity theft, divorce, illness and the unexpected loss of a job are all huge game-changers that affect your ability to maintain good credit. Most mainstream lenders aren’t looking at such situations, however. They’re using an automated system that crunches a few numbers and they let those numbers dictate your fate.
Poor credit score? Good luck trying to get a loan.
Don’t despair just yet, however. There’s hope on the horizon.
Getting your credit back into shape
Before applying for any loan, it’s always wise to do all you can to whip some respect back into your credit report.
Get a copy of your credit report, to begin with, and familiarise yourself with what’s there. If you ever need to defend, explain or simply discuss your history with a potential lender, you’ll be prepared to do so after knowing what might concern them.
After taking a good look at your credit, follow these steps to make it more pleasing to the eye of lending institutions:
– Pay bills on time
– Don’t be late on any payments, even credit card ones
– Look into removing bad credit listings
– Don’t apply for credit too often (more than once in six months is suspicious)
– Take action to correct debts and deficits
Apply for a loan - and succeed!
As mentioned earlier, most lenders make it difficult for those with credit problems to get a loan. But there are some specialist lenders who actually make the effort to look at more than your credit score.
Some of these lenders understand that you may not be a bad borrower. You’ve simply faced some challenges and need someone who understands your situation. These lenders will take a look at your circumstances, the whole picture.
In some circumstances you may be able to avoid Lender’s Mortgage Insurance (LMI). LMI protects the lender, but that bring about even more strict borrowing requirements. Some specialist lenders may provide their own alternative, so to speak, which is far less discriminatory.
Given the complexity of the circumstances, it is highly recommended to take advice from a finance broker.
Remember that transparency is crucial during the process. You’ll gain nothing but the doubt and suspicion if you try to overlook important details or omit key information. It will only make it harder for you to get a loan if you’re dishonest.
At the heart of the matter, getting a loan with bad credit is possible. You need to:
– Avoid more debt
– Repair your current credit history
– Stay on-track with your current spending and saving habits
– Work with a finance broker to find lenders who understand your situation
So how do you get started?
Contact Funding Options. We’re ready to help you put a plan in place, find the right lender and start realising your financial dreams.
– Dom Cassisi, Managing Director