Bad Credit Loans – Who Are They For?
You need a good credit score (commonly known as CIBIL score in India) to be approved for loans, credit cards or other forms of credit at any point in life. This three-digit score ranges between 300 and 900, with the average being around 750. Anything below this, and most banks or non-banking financial companies will consider you a high-risk borrower.
Check your score online to get a better idea of your creditworthiness, especially if you’re planning to apply for a personal loan or credit card. Low credit scores can be caused by a number of factors, and if you find that yours is less than the average, bad credit loans could help you pay down your debt and improve your credit history.
Do I Need a Bad Credit Loan? How Can It Help?
Here are some examples of situations where you may need a bad credit loan:
- You have multiple outstanding loans, large credit card balances and other unpaid debt, or very high-interest rates because of poor credit scores.
- You find it difficult to make EMI or credit card payments on time every month, leading to late fees and charges being added to your existing debt.
- You have no credit history at all, having never used any kind of loan or other financial product in the past (yes, this is quite common in India!).
Unsecured personal loans or revolving lines of credit like MoneyTap can help you in these situations. You can use these products as bad credit loans, to manage your debt as well as improve your credit score over time. Credit lines are far more flexible than traditional options for debt consolidation, and often have lower interest rates as well.
Here’s how a personal line of credit can work in your advantage if you have bad credit:
- Loan approval is based on various factors, not just your credit history or score.
- The application process is quick and easy, with no collateral backing required.
- You can build a credit history by using the line of credit and repaying it on time.
- Consolidate high-interest debt with a credit line that has better interest rates.
- Use flexible credit to clear overdue loan EMIs, credit card bills, utility bills, etc.
- After approval, you have guaranteed access to emergency funds in times of need.
- Credit line recharges with every payment made, so you have a lifetime credit option.