Is It Possible to Get Personal Loans With Bad Credit?

Loans can be valuable, especially in crunch situations. Whether you are looking to buy a new house or purchase a new car, it is easier to avail of loans instead of having surplus cash reserves with you. However, you might be aware that the interest rate and loan duration majorly depend on your credit score.

In fact, a majority of banks might even refuse to grant loans if you have less than a decent credit score. But that does not mean that all financial institutions follow the same practice. For example, you can obtain bad credit loans from Finance One or similar financial institutions and not worry about the approval process.

Why Loans Are Helpful

Loans are crucial for critical situations. Suppose you don’t have enough cash at the moment. Borrowing money from a close friend or relative is unadvisable, especially if it is a significant amount.

This is where banks and financial institutions can help. By providing loans, you can fulfil several obligations, including emergencies. Since you can avail of personal, student, and business loans, among others, there is no situation that loans can’t cover.

As of September 2020, the amount of outstanding personal loans in Australia was more than $145.5 billion. The value of individual loans exceeded any other types of loans. Before finding out why let’s look at what personal loans entail.

What Are Personal Loans?

Usually unsecured, you can use personal loans to address various needs, including credit card debts, financing personal stuff, vacationing, or even medical expenses. These loans possess a set repayment period and can be paid back in fixed monthly instalments.

Unlike their contemporaries, personal loans are synonymous with minimal documentation. Some of the aspects involved in a personal loan are:

  • Fixed monthly payments: Once you avail of the loan, you are required to make fixed monthly payments to the institution until your loan is repaid. Making your payments on time can help gradually build your credit score.
  • Interest rate: The annual percentage rate, charged along with the loan amount, constitutes an interest rate. The higher your credit score, the more chances you receive a lower interest rate on your personal loans.

However, personal loans are also suitable if you have bad credit. In fact, bad credit loans from Finance One or similar institutions can help you kickstart your journey. You can use these loans to settle outstanding amounts and gradually build up your credit score.

Is Bad Credit Irreversible?

Contrary to popular belief, you can improve your credit score by making timely payments and clearing outstanding dues. Bad credit scores are not permanent and can go away within months if managed efficiently.

However, you might need loans during this time for personal emergencies. Bad credit loans are a suitable alternative that can provide an acceptable option and place you on the track to a decent credit score.

Despite timely payments, if your credit score is still decreasing, check carefully for any unpaid dues. Even a value as little as $20 could be detrimental to your overall score.

Financial literacy is an essential step to attaining true financial freedom. But having bad credit scores does not mean that you cannot learn. Take it as a starting point to expand your knowledge and learn how to maintain your credit score.

If you find yourself in need of an urgent personal loan while building your score, you can always rely on bad credit loans!

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