How To Negate The Loan Rejection Chances With Very Low Credit?

Are you finding it hard to deal with terrible credit? You must be tired of facing rejections. All you need is some alternative ways to navigate the situation.

Can you still make it to loan approval? This question might have popped up in your mind many times. With poor credit, affordability is the major factor that can emphasise the possibility of getting loans.

When your credit scores are beyond low, it is a highly risky state. Your debts have surpassed the optimal limit you can bear and affordability cannot be established right now. In this situation, getting a breakthrough is not impossible but tough.

The first thing to try would be to stabilise your financial condition. Maybe you have to start from scratch, but getting started is critical. Every effort you make towards credit improvement will be counted.

This will somewhat smoothen the process of getting very bad credit loans from a direct lender. Thus, here, you should ditch the idea of getting financial help from a traditional lender. With your present credentials, fulfilling their lending conditions would be difficult.

Analyse the avenues you might resort to arranging external funding despite very low credit scores. This blog can guide you on this.

Minimise the chances of rejection with a very poor credit score

The stigma that you are facing current because of poor credit is indescribable. Financial crunches will be a common problem but seeking assistance would become difficult for you. Lenders will consider you a risky borrower and you have to blame your financial situation.

Not every lender will be against you as some will be willing to help provided you fulfil some of the basic priorities. Figure out what you can do to win the confidence of the lender.

§  Show signs of improvement

Although trying to achieve this in your situation is difficult, you should not give up. Whatever little you can do to downsize the level of debt will prove to be beneficial for you. It could start by eliminating expenses that are least important.

If you like to maintain a costly lifestyle, switch to a frugal way of living. It is about focusing on very basic necessities by eradicating the ones that are avoidable. With it, you may or may not be able to disburse pending payments.

No worries as you can prevent further accumulation of debts. This step will also have a positive impact on your finances.

§   Formulate a budget all over again

It is time that you must redo the old budget you have been pursuing so far. This is not a workable one and needs some modification on the spot. Go ahead with the changes so that they can match your present circumstances.

You should be trying to increase the savings. For that, you must try to reduce your expenses at any cost. That is not going to be easy as some of the payouts will be vital.

Review expenses carefully to find out the ones that should continue in this present scenario. You will surely be able to discard some payouts and free up some cash to contribute for debt payments.

§   Amplify your income avenues

At the time of adjusting the budget plan, you may find no avenues to exclude ongoing expenses. In that case, you should not feel disappointed thinking how you will recover from very poor credit scores. This is because you must try to earn through other means if you cannot eliminate expenses.

Additional income will help you to plug the funding gap. Try doing from a part-time job to generate some savings which you can further utilise for debt payments. You can even ask your present employer to give an increment or look for a better job.

With this option, you do not have to contemplate getting loans, which can turn into debts if not repaid on time.

§   Place a guarantor or collateral

Since your financial situation is terrible, there is no confirmation if you can repay loans or not. You should pay attention to this aspect if you are applying for loans. In that case, the lender would need someone who can guarantee loan payments.

They can be your guarantor, but finding the right fit is indeed difficult. Besides, you can think of pledging assets if you have. However, defaults would result in permanent loss of assets.

You should be prepared for the extreme circumstances if you are willing to produce your assets. Now, if you are a tenant or unwilling to risk assets, agree to accept a high rate of interest for these loans.

The bottom line

With very low credit, your financial problems have already been intensified. However, with poor credit, you can still make it to 15-minute loans with no credit check. The lender will have fewer factors to validate as compared to your situation with very poor credit.

This is because a lot of factors are involved when you need financial help with very bad credit. The lender even has to validate the financial background of another person i.e. a guarantor. For this reason, the process of getting approval becomes difficult.

However, you should not think that there is zero opportunity for you.

FAQs

What do you mean by very bad credit?

When your credit score is below 500, according to Experian, you have a very low credit score. This is an alarming state and makes it difficult for you to get external financial help. Late or missed payments and unproductive financial habits can lead you here.

Is a guarantor necessary to get a loan with very low credit?

Yes, you might be asked to produce a guarantor who can support loan payments on your behalf. Besides, if you cannot satisfy this condition, you must think of other ways, like pledging collateral or accepting high rates of interest. You must consider talking to a direct lender first.

What is the likelihood of getting accepted for very poor credit?

It is tough to convince the lender for loans with very poor credit. They cannot get any assurance about loan payments as your financial condition is very unstable. In this situation, you must put up something that can make sure about loan repayment to improve the likelihood of getting loans.