Your credit score is the main thing banks and lenders look at when you apply for loans. Even if you try to take out a loan from an online money lender in Singapore, known for its ease of approval, your credit score still matters.
But what if you need additional cash and your credit score is already low? Here are three things you can do.
Explore options to restructure your debts
If you have one or more unpaid loans, these can drive your credit score down. The higher the outstanding amounts are, the lower your credit score will be. The situation can become more difficult if you are not stable financially.
One thing you can do, though, is to restructure your debts. Banks and other lending institutions offer restructuring, where they can lengthen the loan tenures or decrease interest.
Some banks and lenders even offer debt consolidation – here, they “buy” all your outstanding debts and pool them into another loan that has a smaller overall interest rate and a longer tenure. This way, you can more easily pay off your debts.
Once you begin to pay down those outstanding debts, your credit score will slowly recover. In turn, you will be more qualified for subsequent loans.
Take out smaller loans
If you really need to take out another loan but your credit score is not at its best, try applying for loans with smaller principals. While they may not be enough to cover your needs, at least you can borrow some money to ease your financial burdens in the short run.
When you do take out smaller loans, take measures to be able to repay them too. Avoid borrowing haphazardly when you do not have the means to pay back. Moreover, avoid applying for several small loans at once. Doing these things will only bring down your credit score even further.
Get a bad credit loan
Some moneylenders offer loan products specifically for people with low credit scores. These loans generally have lower interest rates as well as longer and more flexible tenures. This way, you can get the money you need and repay the loan even with a substandard credit rating.
Bad credit loans can even help improve your credit score if you use them wisely. Pay off the loan on time and in full each month, and you will build a record of good repayments. In turn, your credit score will go up gradually.
Despite this advantage, do not apply for a bad credit loan immediately. Evaluate your options first as well as your financial situation. A bad credit loan is not always the best choice, though it can help in certain circumstances.
Conclusion
You can still get loans despite having a subpar credit score if you need the money. Follow the three tips above and you can ease the burden on your finances. Explore online money lenders like Prosper Credit to find out how you can get these kinds of loans.