Getting a loan, and that too with a poor credit rating, seems like a big challenge. But not anymore with new and liberal ways of lending that offer borrower-friendly deals.
In fact, nowadays, you can borrow funds while improving your credit score for a stable financial future. Let’s delve into the guide below to know ways of availing funds with a poor credit rating. Also, learn how to fix bad credit in Ireland as a borrower.
What is a bad credit score?
A bad credit score is an indication of delayed or skipped payments. It denotes an irresponsible payment behaviour. Hence, a bad credit score is created due to the following issues.
- Late or missed payments.
- Previous loan defaults.
- Multiple credit applications
- History of loan arrears.
- High existing debts.
Where to get a loan for bad credit in Ireland?
With a poor credit situation, you can’t take chances and need to find dependable sources of loans. Find platforms that actually consider applicants with a less-than-perfect credit score.
Specialized private lenders: Private lending is known for speedy and specialized loan products, including bad credit loans. Here, unlike banks, approval decisions remain unaffected by credit history, and you can borrow as per your current repayment ability.
Credit Unions: These, too, are a good option, but are available only for union members. Also, even for members, having a good savings history with the union is an important factor.
Secured loans: This is the easiest option if you need an assured approval. Pledge an asset, such as a car, property, etc., and get approved for a big amount at a lower rate. But delaying repayments may mean losing your asset.
Steps to get a loan in Ireland despite a poor credit score
Yes, you need to work through a strategy to make sure you are applying in the right manner, avoiding pitfalls.
1.Check your credit report: Wrong or incomplete information on your credit report can cause a considerable drop in your credit score. Hence, check it and get it updated and rectified.
2. Assess your financial situation: You should know all your debts, income, expenses, and the loan amount needed. This is how you can know how you need to navigate through your loan requirements and avoid useless expenses.
3. Reduce existing debts: Paying off some small debts will be a wise act in case of a poor credit rating. This will impress the lender, convincing them of your repayment ability. Also, you can get a bigger loan amount. This enhances the debt-to-income ratio as well.
4. Check repayment ability: Use a loan calculator and get the idea of the approximate loan amount, interest rate, and instalment you can qualify for. Online and AI financial tools today give almost accurate results.
5. Choose the right lender type: Thing and choose the right lender type from those given above, that is, a private lender or a credit union. Banks are not an option as they do not usually consider poor credit applicants.
Factors to consider when shortlisting lenders –
Consider speed an important factor: Bad credit applicants, too, have the right to get funds fast, like those with a good credit score. Financial emergencies leave no one untouched. Choose a lender that offers speedy funds, like private lenders that offer instant approval decisions.
Affordability is vital: A lender that offers budgetary deals should be chosen. After all, you don’t want to get back into a poor credit situation or a debt trap due to hefty repayments.
Flexible repayments are useful: Selecting a desired repayment fund is a good choice to have. Repayment plans, weekly, fortnightly, and monthly are available. Get a plan as per the credit purchase power.
Arrange the required documents
Accurate and updated documents help in getting immediate approval. Hence, make sure you have the following details ready.
- Passport or driving license.
- Bank statement 3 to 6 months.
- Recent utility bills for address proof
- Income proof for the last 3 to 6 months
- Employment proof
- PPS number
Do not be careless, as incomplete information may make a lender reject your loan application. If not rejected, you may get a smaller loan amount at a higher rate, as the loan company is not able to know your finances better due to incomplete information.
How to strengthen approval chances?
Once you choose the lender, work on all factors that boost the chances of getting accepted by a lender.
Show stable income: Income stability is the strongest factor for approval. The last six months of regular earnings are decisive.
Keep bank statements clean: Your bank statement should show a good payment record. Avoid missed payments, overdraft overuse, limit or avoid gambling.
Offer a guarantor (not obligatory): You may or may not work on this option. If it is possible to arrange a guarantor, getting approval for a big loan amount at a lower rate is possible.
How to boost your credit score while you borrow?
Now comes the way to upgrade your credit record.
- Make timely payments: Of course, that is the first thing you need to do for an improved financial record and a better life. Do not miss any direct debit.
- Reduce credit utilization: Make sure the credit utilization percentage is lower than 30%. That really boosts your score fast, and your future loan approval chances get better.
- Close old high-cost products: Payday loans, credit cards, etc., close your high-interest debts as much as possible and as soon as possible. This creates more space in your credit mix for a new loan.
- Avoid applying to multiple lenders: Applying to multiple lenders at the same time shows you are credit hungry. This may make the lenders feel that something chaotic is going on in your financial life.
- Build a savings history: Bigger savings show stronger financial stability. Therefore, save as much as possible. The saved money can also be used to pay instalments in case of financial issues or job loss.
Conclusion
After consuming the information above, it is clear that availing funds while improving credit score is possible. But you need to work on all the significant factors that ensure a smooth sail to loan approval, navigating through the application process. How to get an urgent cash loan? If this question arises in your mind again, you have all the answers ready.
Caleb works as a senior content writer at Loanstopocket for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
