Having a bad credit score can have a considerable impact on your ability to get approved when applying for a loan. When you need a loan, but your credit may be holding you back, it’s helpful to understand how that’s happening. We’re going to look at how a damaged credit history can have lingering effects on loan approval odds for a long time. We’ll also look at some of the potential solutions for those in need of financial assistance. In the end, we’ll look at why Lending Bear should be your choice for finding funding with a bad credit score.
When it comes down to it, a credit score is an estimate of an individual’s overall creditworthiness. It is calculated from a complex array of factors and represents a numerical summation of your entire credit history. As with most other scoring models, higher scores are better, and lower ones are worse.
Higher scores represent a consumer that is more likely to pay their obligations on time, and to settle their accounts as agreed. Lower scores indicate more financially risky consumers, who may be more likely to make late payments, miss payments, or even default on lending agreements. This is why it’s important to fix a bad credit if you need to work with traditional lenders like a bank or credit union.
Credit records can be complicated, and credit score calculations can be incredibly complex. That said, some factors are known to contribute to a bad credit score, including:
If you know that you have any of these on your credit report, they are great places to start repairing your credit. Each one is a major factor in score calculation, with on-time payments being the most heavily weighted factor of all.
Lenders looking at a potential borrower with a bad credit score are more likely to mitigate some of that risk by adjusting the interest rate upwards. This increases the overall cost of borrowing for the consumer, which makes it less likely that they’ll take a risky loan out. Many borrowers will use short-term lenders when their score isn’t high enough for traditional lenders.
Having a bad credit score can limit the types of loans or lenders that you can use. Many traditional lenders, like banks, have strict eligibility requirements that include credit score minimums.
If you have damaged credit, you may not be eligible for longer repayment terms. This makes the monthly payments higher and can decrease the affordability of the loan.
In some cases, lenders may require collateral to secure a loan. Others may require a cosigner to be equally responsible for the loan.
If you have a bad credit score and need urgent funding, there are still some options. Take a look.
Good credit is hard to keep, and one or two mistakes or emergencies can ruin credit for years. That doesn’t mean that you shouldn’t have access to reliable, emergency funding. Reach out to Lending Bear to get started. Cash when you need it, fast and friendly!