At one point or another, many of us have been faced with a poor credit rating that has come in the way of qualifying for loans. As a result, there has been a surge in lenders who offer short-term bad credit loans, as high as $2,000.
Bad credit loans are an excellent option if you have a bad credit profile and need quick cash. This post will take you through some pointers to help you secure bad credit loans.
5 Tips for Securing a Bad Credit Loan in Australia
1. Consider Taking Out No Credit Check Loans
Banks perform credit checks every time you apply for a loan. Banks do this to go over your finances to determine your creditworthiness.
Therefore, if you have a poor credit rating, a bank will reject your loan application. However, being strapped for cash might make you try your luck with other banks.
All these loan applications will subject you to numerous credit checks, which will likely hurt your rating further.
You can get payday loans from platforms such as Viva Payday Loans, offering payday loans for bad credit instant approval. Viva Payday Loans is a reputable loan matching service in Australia that offers a borrower a platform where they can apply for bad credit loans.
Since these lenders don’t look through your credit file, your credit score won’t matter. Additionally, you won’t damage your credit score further.
2. Opt For A Loan From A Credit Union
A credit union refers to a money cooperative democratically controlled by its members. This financial cooperative aims to promote thrift, give loans at competitive rates and offer other money-related services to its members.
Credit unions are non-profit making. They pass their revenue to their members through reduced borrowing costs and charges, alongside better customer support.
Unlike conventional financial institutions, which use credit profiles to determine if one is eligible for a loan, credit unions are considerate, and they can give you a loan even if you have a bad credit rating.
Credit unions get their money from their members and other investors. However, as considerate as credit unions can be, they have their lending standards. Therefore, you must meet specific criteria before your no credit loan gets approved.
3. Use Collateral Or Security
Individuals with poor credit ratings are often considered a risk by default. Therefore, secured loans come with collateral. If a customer is willing to provide a car, house or anything valuable against the loan they wish to apply for, they increase their chances of qualifying.
Auto loans, mortgages, and home equity loans are considered secured loans because the borrower attaches collateral.
Note that your car or house or any other collateral may be at stake, and you may lose them if you don’t repay your loans—the lender who provides the secured loan has the right to confiscate your property if you don’t keep your end of the bargain.
Several loan providers that offer unsecured loans like credit unions and banks also provide secured loans.
4. Present Or Declare Your Savings Account
Evidence of savings can increase your chances of success when applying for a loan with bad credit. The size of your savings doesn’t matter—you can prove to lenders that you’re financially stable and on track to improve your credit score even with small savings.
An excellent savings record shows that you can make regular deposits, which loan providers may infer as the potential to meet your repayments regularly. Proof of saving records also offers a buffer for your loan repayment.
5. Manage Your Income
Extremely high living expenses can have a knock-on effect on your application, especially if you have bad credit.
Even if you pay your bills on time and have no debts, your loan application can be turned down if you spend your earnings frivolously. It’s prudent to manage your cash flow properly.
Reduce your discretionary spending—minimize coughing up money on luxury and recreational activities like appearances in pubs, bars, clubs, and movies.
Try to cook at home instead of ordering food every time. You can also cancel the memberships you don’t use, like subscription boxes, streaming services, and gym membership.
Think twice if you’re thinking of withdrawing all your funds from the account to prevent the lenders from monitoring your expenditure. Huge ATM withdrawals are a sign of poor fund retention and indicate a gambling habit, depending on where the withdrawals are made.
You should focus on minimizing your discretionary spending to increase cash reserves and show good spending habits. You can apply for a loan once you’ve established this pattern.
Wrap Up
The uncertainties of life may force you into a tricky financial situation that may require you to get a quick loan. Luckily, you can access some loans even with bad credit. The tips above will help you apply and get approval for a bad credit loan.
