Low credit score, how do you get a personal loan?

Low credit score and relatively difficult borrowing, but there are still opportunities to borrow money. The key point is that we must choose the loan with the lowest overall cost.

Even if the credit is not good, there are still lenders who intend to borrow money, but usually the cost is relatively high, so they must be calculated carefully.

Lenders usually assess the risk of lending based on the borrower’s credit score. Lenders’ definitions of good or bad credit are not exactly the same, but the general principle is that 800 to 850, 740 to 799, 670 to 739, 580 to 580 To 669, difference of 300 to 579; high score is not only easy to get a loan, but also good conditions, such as low interest rates.

Some lending institutions advertise a wide range of loan interest rates, such as ranging from 6.95% to 35.89%. The interest rate is determined by the credit score, which varies widely.

What are the credit loan options?

Traditionally, bad credit loan options include finding a co-signer, using a high-interest-rate credit card, or even a payday loan. Today, more new options appear on the market.The charges, interest rates, loan regulations, and overall quality of bad credit loans may vary widely. Some loans are not a good choice for some borrowers. You must do your homework in advance. Never make a rush decision because of advertising; I have been to a customer who almost borrowed a three-year loan of 1,000 and repaid 200 per month. Fortunately, a credit adviser pointed out that this would result in a total repayment amount of 7,200 and an annual interest rate equivalent to 240%.

How to choose a loan?

First, discuss with your bank to see if there is a special plan. Some traditional banks and credit unions are willing to offer small loans to people in trouble.

Second, consider non-traditional funding channels. There is a so-called “point-to-point” or “P2P” model. The borrower is a group of investors, rather than a single financial institution. The advantage is that the credit requirements are more relaxed, the disadvantages are higher costs, and the interest rate is even higher than the credit card.

Third, avoid “payday loans.” The interest rate of such loans is usually as high as 400% to 500%, or even 1000%. It is very difficult to repay the debt in the future. The borrower will end up paying much higher than the original loan.

Fourth, avoid “equity loans.” Mortgage by different property rights, the car property loan is to use the car mortgage to borrow, if you do not repay, the lender can confiscate the vehicle; the loan interest rate is often as high as 300%, 400%.

Low credit score require loans, and the most important thing is to find low cost loans to avoid worsening financial difficulties.

Here’s how to find low cost loans:

‧ Request an alternative credit score.

Low credit score, or even no, mainly because of lack of credit history, always paying bills on time, but people who use cash to spend often encounter this situation, and can ask for alternative credit scores to explain their credit status; Various credit scoring models have been developed in the past few years. FICO Score, XD and other credit scores have been selected based on different calculations, including mobile phone, cable TV, Internet and utilities bill payment records. UltraFICO scores also include the relationship between individuals and banks Take into account.

‧ Strive for pre-qualification.

Every time people apply for a new credit line, they will be checked for credit, called a “hard check”, which will lower the credit score. In the event of applying for several credits within a short period of time, it will be more difficult to pass the credit score because of being dragged down; Eligible can retain credit scores and keep credit checks until they are considered likely to be approved.

If you want to reduce the cost of loans in the long run, the fundamental thing is to improve your credit score.

Some simple habits can help improve your credit score, such as checking credit reports for errors, reducing revolving loan balances, properly scheduling payment schedules, being an authorized credit user for responsible people, and making payments on time every billing cycle Keep all old accounts;

Among them, the reason for keeping all the old accounts is that one of the credit score is based on the average usage period of all accounts and the length of time of the account with the longest usage period, so do not close an account with a long history.

When you are craving for cash, the risk of applying for a loan is the greatest, which may worsen your finances. It is best to talk to your bank to find the most sensible countermeasures.

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Robin Bell

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