A person who has applied to own a credit card or borrow money will have an active credit file, be it in one or more than one of the credit bureaus.
All of their financial activities are stored. These include loan applications, their respective outcomes in the forms of approvals and rejections, credit cards and credit card loans, how much money they owe, and whether they are pedantic and punctual about paying their bills.
This data is available at all times to potential lenders and creditors, who utilize all of the available information to formulate lending decisions about their potential borrowers.
The information stored in a person’s active credit file is used to compute their credit score. Usually, bad credit is considered as a credit score under 580. So, does bad credit affect loan approval?
Yes, very much. It can lead lenders to conclude that they are a risky borrower and impact your odds for a loan.
Additionally, bad credit can affect the amount of money that lenders are willing to provide, whether or not a person can get a mortgage or other loans that they are interested in. Their financial history and financial situation will determine whether they are trustworthy and creditworthy to lenders and landlords alike.
Several factors affect loan approval negatively, and they are listed below:
- Payment history
Late payments will result in information reports from creditors to credit bureaus, thus having the information recorded in the active credit report.
Routinely missing payment dates for either utility providers, credit card companies, or lenders will negatively affect a person’s credit score. These consistent and late payments will lead a person’s credit score to be deemed “poor” or ‘very poor,” which in turn will diminish chances for further loans.
This factor makes up around 35% of people’s credit score.
- Collection agencies
The next factor is interrelated to the first one.
Namely, falling behind on payments can lead the lender or the creditor to transferring your account to a collection agency. If a person consistently misses payment dates and fails to make the full minimum payment, lenders and creditors will call to warn them.
Once one’s account is forwarded to a collection agency, this information is recorded in your file.
- Overdue and uncollected debt
This kind of debt, known as a charge-off, traditionally happens when the creditor has given up on a set amount of payments from the borrower.
This leaves a severe dent in the borrower’s credit file. Once the account is charged off, the account holder will no longer be able to make purchases and is in severe debt.
A similar phenomenon is loan defaulting. It occurs when payments aren’t made for a certain period.
Once this happens, the information is forwarded to the credit bureaus and damages the credit score. Prospective lenders will view the client as a potential risk.
Unable to pay debts, one may be forced into filing for bankruptcy to obtain legal protection. While filing for bankruptcy is extreme, it is also the most damaging to one’s credit score.
Filing for bankruptcy will usually stay on the borrower’s record for seven years. A history of bankruptcies will lead lenders to stay away from such borrowers, as most such cases often involve courts.
Personal loan companies can help with your financing needs, no matter whether it is what you require to take off the burden coming from high debt, a high-ticket purchase, or a business startup. However, it is of paramount importance to turn to a reliable company.
At UK Credit, you can expect to collaborate with a licensed moneylender in Singapore that ensures quick loan disbursal. We provide unsecured borrows. What does this mean? Well, our personal loan is not tied to asset transformation, which is often undertaken by banks. More importantly, people can enjoy perks such as favorable interest rates and flexible amounts that suit their needs.
Unlike loans that are available through banks, alternative loans can be landed to individuals from private money lender companies. These companies fund the amount that is specifically tailored to one’s current needs.
The main benefit of alternative loans is that individuals are able to qualify for them with a low credit score.
One of the most popular forms of alternative loans is the so-called “Payday loan.”
It is beneficial because it’s one of the fastest ways to obtain money when an individual has a dire need for it. And by “fastest,” we meant almost-instant, same-day transfer of funds; within an hour.
Let’s face it, everyone needs a bit of a boost like that every now and then. To get a sense of the most common reasons one applies for a payday loan, here is a list of emergency situations it can solve:
- Cover late payment charges and debt
- Medical emergency
- Unexpected bills
- Vehicle breakdown
- Sudden home repairs
- An essential high-ticket purchase
This is by no means an exhaustive list but demonstrates how useful Payday loans can be.
Prior to applying for alternative loads, it’s vital to find a lender that has a demonstrated record of confidentiality, professionalism, and good service. At UK Credit, these are our core values.
When you fall short of money to fund your expenses, you definitely want to avoid rejection of loans that can oftentimes be caused by bad credit.
Luckily, there is a way to go about it. At UK Credit, we evaluate personal unsecured borrow approvals based on your needs and not your asset and credit profile.
For instance, we do not consider adequate bank balance, net monthly income, and similar factors that affect your earnings. Individuals are able to apply for amounts as high as 6 times their salaries or as low as they need for their immediate needs.
Furthermore, we will not sanction your loan based on credit card dues, limits, or the information from credit bureaus.
It is also possible to apply for our loans even if you have existing ones. That said, we can provide professional assistance with creating a plan for repayment.
Our installment plan allows you to set up your own pace and break down the expenses to up to a year. The interest rate reduces 4% each month, which leaves your budget unburdened by additional expenses or pressure tactics some companies are known to inflict.
Thus, at UK Credit, we are not limited to borrowers who have a good credit score. Despite a bad credit history, there’s a very high probability that you are eligible for the loans. Our ability to approve loans caters to many individuals’ needs, from debt consolidation to wedding, medical and education expenses.
Due to a streamlined and systematic approach, it is easy to collaborate with us, without the usual unnecessarily complicated paperwork and long approval. As the whole process is transparent and direct, it will not take long before your financial situation is resolved and money is transferred to your account. Reach out to us today!