Borrowing money is tough enough without the added burden of a bad credit history, and for some people obtaining a loan seems impossible, as most loan providers use the international credit rating system to validate applicants. A bad credit rating basically tells a lender only one thing, that you have, in the past, made an error, and this should not be something that sticks with you for the rest of your life. There are online finance companies that think people deserve a second chance, and bad credit history is often accepted, and with flexible repayment packages, the borrower will not be overstretched.
Credit Score Explained
From the lender’s perspective, borrowing money is all about risk, and in Australia, every adult has a credit score, which is reliant on many variables. A person’s credit score can be determined at any given time by analysing the person’s current status, and this is the main indicator for a bank or finance company as to how credit worthy the person actually is. This information would include the following:
- Personal Details – Age and Location
- Amount of credit applied for
- Amount of credit outstanding
- Any outstanding debts
It would also include details of any personal insolvency agreements that might relate to bankruptcy, and the score could range from zero to 1,200. Read various references online for more detailed information about the credit score system.
Five Point Scale
A person’s credit score would fall into one of five categories, which are:
- Excellent – Highly unlikely to experience any adverse financial issues in the coming 12 months.
- Very Good – Unlikely to experience any adverse financial issues in the coming 12 months.
- Good – Not likely to experience financial difficulties in the coming year.
- Average – The person is likely to have an adverse financial event in the coming 12 months.
- Below Average – The person is very likely to experience an adverse financial event in the coming 12 months.
If a person applies for a personal loan and their credit score is in the below average, there are companies that will accept the application, and the best way to source such a lender is a Google search. Once you have sourced a finance company that offers bad credit personal loans, they will do their best to facilitate the loan application.
Debt Consolidation
If a person with a bad credit score has 3 or more monthly payments that are due at varying dates, it can be difficult to manage to make prompt payments, and in this case, debt consolidation is perhaps the best solution. This involves merging the debts into one payment, and is a very effective way to eliminate debt, something that plagues many people.
Professional Advice
There are online loan providers who are dedicated to helping people solve their financial issues, and it helps to have an experienced hand in your corner. A reputable company would not have the goal to see as many loans as possible, and they would always ensure that taking out a loan is the best solution, and in some cases, it is better to clear outstanding debts prior to making a loan application, as this will increase the person’s credit score. Although finding loans for a home business is not that easy, it is still possible especially with the help of ecommerce merchant account.
If you are facing a financial meltdown, talk to the online experts, and hopefully, they can guide you through this stressful time.
