How to get quick loans with bad credit?

You must go through a lot of procedures while applying for a loan in India. Moreover, getting it approved is an uphill task as you may have to fulfil all the eligibility criteria prescribed by the bank. The lenders usually do a credit check while you apply for a loan. if you have a bad credit score, it becomes all the more difficult to secure a loan with bad credit.

When a sudden financial emergency strikes, you might be in need of a quick loan with no credit check. Finding a lender who offers a quick loan for bad credit individuals is a difficult task, but, however it is not impossible. Before going into where to apply for a quick loan with bad credit or get a quick loan with bad credit, let us first understand what bad credit is and how you can improver your credit rating.

What Is a Bad Credit?

A bad credit history or credit score is a resultant of poor management of your credit. It could be due to any of the following reasons

• Late payments on your loans and credit cards
• If you have missed your payments on your loans and credit cards
• Foreclosure
• Written-off or settled account
• Too many hard enquiries

A bad credit puts you in the bad book of the creditors and any future loan application is turned down due to the above reasons.

Loan Against Assets

You can get a quick loan that are instantly approved by pledging your assets even with a bad credit score. As you mortgage your property, the lenders may be flexible in terms of eligibility criteria and sanction the loan that you need. The interest rates may be slightly higher as you have a bad credit score. However, this is one of the easiest ways through which you can get quick funds for your immediate needs.

Secured Credit Cards

Secured credit cards allow you to access quick loans even with bad credit. If you have a fixed deposit, you can get a secured credit card. The credit limit is allotted against 70 to 80% value of the fixed deposit.

Though you can get a secured credit card to manage your finance, this does not improve your credit score unless you have cleared your past dues or negative account which are the causes for your bad credit score. This credit card may give you the access to emergency funds, but it will stick with you for a long-term.

Salary Advance

There are few financial services companies that offer half the amount of your monthly salary in advance to meet your short-term cash needs. These organisations do not consider credit score as the main criterion to give out the loans. The process is quick, and the loans are disbursed directly into your bank account after the approval.

Peer to peer lending

This is one of the fastest ways of getting instant cash in a click of a button. Peer to peer lending platforms collect the personal information of the borrowers and process the application. It is quicker, and you can get hold of the cash immediately after the approval. The rules are more flexible, and chances are higher in accessing the credit. The interest rates tend to be little more than the title banking system due to its convenience and ease of application.

Get a Co-Applicant

When you have a poor credit score, you can seek the help of a co-applicant to get a loan. It could be your friends or family members. The co-applicant can be the primary applicant whose income and credit history will be considered for the loan. In case of a home loan, the rules might vary for a co-applicant as the banks lay down certain conditions.

Approach Your Current Lender

You can directly go and talk to your current lender with whom you have maintained your account for a long time. You can negotiate with the lender for a better price and better deal. This could considerably reduce your search and processing time. This way you can get a quick loan even with a poor credit.

How to Improve Your Bad Credit?

One cannot improve their bad credit overnight. Having bad credit is not the end. One can improve the credit score by following the steps given below.

1. Paying of your old debt

In case you have a “settled” account – where you have only paid partial amount of your debt or “written off” account – you did not pay your debt at all and the bank has considered it as a bad debt and conveyed the same to the credit bureau, you need to settle those accounts. If you do this, it will boost your credit score.

2. Keep your credit balances low

Make sure that you don’t exceed more than 50 % of your credit limit. This helps you to keep your credit utilization ratio (the proportion between your actual spending and your credit limit) at a lower rate and has a positive impact on your score. For example, if your credit limit is Rs. 1 lakh, make sure that you do not exceed a monthly bill of more than Rs. 50,000. A bigger credit utilisation ratio implies lack of spending discipline.

Remember to pay your dues in full rather than paying the minimum amount for your credit cards.

3. Apply for new accounts only when needed

Make sure that you don’t open too many new credit accounts. Every time you apply for credit (whether a loan or credit card) it results in an enquiry by lenders. Multiple enquiries in your credit report reflect that you are ‘hungry’ for credit and may not be able to fulfil your debt obligations.