If you have poor credit, it can be very difficult to get a personal loan. Banks and similar financial institutions are typically unwilling to loan money to people with credit scores of 550 or lower. But emergencies strike us all and sometimes you need a loan regardless of your credit score. If you are in need of a loan, here is what you should do.
You aren’t alone. Plenty of people have poor credit, and many of them are in the situation through no fault of their own. The good news is there are people out there, like the professionals at Eastern Loans, who are prepared to give you a loan even if you don’t have the best credit.
Get your credit information together
The first step in getting your loan is to gather all the information you need to make an application. You will need to find out your credit score and be able to explain why the score is what it is. If you can show you understand the situation and your score, you are more likely to get the loan you need.
You should also check your credit score report to make sure there are no mistakes. If you see something abnormal or inaccurate, you should contact the credit reporting agency and dispute the erroneous information.
Gather you personal information
All lenders will want to have some hope of getting their loan back from you. They need to know a bit about your personal information in order to decide if they will loan to you, and how much they are willing to give.
You should be able to show proof of income, a valid account at a Canadian financial institution, proof that you have had your job more than three months, and proof that you are over 18 years of age. Even if you have poor credit, these pieces of personal information show you are a generally responsible individual capable of staying financially solvent.
Getting a payday loan
If you have been turned down by a series of financial institutions, you may have luck getting a payday loan. Payday lenders typically won’t ask about your credit score, and if you get a payday loan, it won’t have any effect on your credit score or your official debt load. In exchange for taking a higher risk, payday lenders typically charge higher interest than a bank would.
Most payday loans have to be repaid within three months to six months. If you don’t keep up with your payments, your debt will show up on your credit score, and your interest rates will likely go up across the board.
When should you get a payday loan?
Payday loans are the answer when you have a sudden financial emergency. You might have medical bills, car repairs, or flood damage to your home to fix. A payday loan can get you fast cash with minimal hassle no matter what your credit score is.
You might also get a payday loan if you know you have the capacity to pay back a loan but have been turned down by a financial institution already. Banks and credit unions tend to give out loans only “by the book,” meaning that they are unlikely to look at the person behind the application.
The bottom line is that you can get a loan even if you have poor credit. Bad credit isn’t always your fault, and if you need money, a payday lender could be a godsend.
Before you apply for any loan, evaluate your personal position, check that there are no mistakes on your credit report. Most importantly, be prepared to show how you intend to pay back the loan. You can get the money you need: it just takes a bit of strategic planning.