Credit scores are the like the stepping stones towards the borrowing journey. Does it stand true in recent times also? You must instead say that this statement is partially true.
Bad credit is still a problem according to the traditional lending process. On the flip side, direct lenders hold a different opinion on this. They are ready to process any loan application without looking into the loan applicant’s credit scores.
What about extremely bad credit scores? It might seem you have very little scope to convince the lender. On another note, you will be happy to know that direct lenders like Loansevent are happy to offer loans for people with really bad credit scores.
It is merely a chance for you. Moreover, the risk level will increase for the lender in this case. You may have to cooperate with the lender regarding some lending conditions.
Straightaway rejection is not at all the outcome you must expect from a direct lender. You must head over to the next part of the blog, which covers whether the lender will keep conditions easy for you to manage.
Should you worry about the lending conditions?
There is no solid reason for you to worry about conditions getting stricter in case of very poor credit scores. Some alterations must be there from the lender’s end. Things will disclose eventually.
You must try to find out how bad your credit scores are. A free report available easily should be enough to open your eyes. The lender will not need this information. How will they handle the issue, then?
Will they perform a credit check?
When applying with a direct lender, you must be calm about credit checks. They have yet to include it in their lending process. There is no question of them enquiring about your past credit history.
They prefer to spend their time on something other than past credit scores. Your affordability holds more weight for them. They will like to analyse your present financial behaviour to determine if you can afford loan payments.
Affordability checks are a must for these lenders. They will go through all the recent bills of the loan applicant. It lets them check the loan payment time.
On-time payments will win their heart. It ascertains that the borrower is trying to put together their financial life. They are working hard to improve their past bad credit scores.
There is one thing you must remember. The lender would like to see that you have applied for a suitable amount. Take your time choosing a more significant amount. It will leave a wrong impression on the lender’s mind.
Do they confirm your income?
Yes, in the case of extremely poor credit scores, the lender will need you to have a good income. However, it does not matter if you are earning from a job or freelance gig. Any income that can suffice the loan payment requirement will serve the purpose.
Getting approval with income is very easy. The lender will be keen to confirm that you can repay the loan money. It is impossible to fulfil this requirement if you are devoid of earnings.
If you are out of a job, you must try to work on some part-time job options. It will help you earn something and would be better than zero income. Despite being lenient, the lender will need assurance about loan repayment. Loan approval is only possible with it.
Is collateral pivotal in this kind of borrowing?
The lender will overlook the matter of your credit scores. You can borrow money from them without placing any collateral. They offer loans as collateral-free cash.
It is alright if you are a tenant or a non-homeowner. You can qualify to apply for these loans. Since no asset is involved, the lender will treat every borrower equally.
There is no problem if you disagree with putting your assets at risk. These loans are for those who are hesitant to hand over assets to you. These loans are also a good opportunity for borrowers who feel reluctant for loans as they do not have any asset possession.
Will they demand a guarantor?
It depends on your financial condition. With very bad credit scores, you are already in the danger zone. On top of this, if you want loan assistance but cannot afford loan payments, arranging a guarantor will be helpful.
It will reduce the lending risk. Your guarantor will have to take care of repayments. They must have good credit scores and stable incomes.
A guarantor can, in fact, improve your chances of getting loan approval with questionable credit scores. It is an excellent option to consider if you are not doing well financially.
Will they increase the rate of interest?
It is natural for you to bother about the interest rates. High rates will be a huge burden when you are facing a tough time. Direct lenders follow the strategy of charging nominal rates to make borrowing affordable for every borrower.
Moreover, you can even ask for a free quote from a direct lender. It will bring something about the rate of interest. Avoid borrowing if you think rates are beyond your capacity.
You can retry getting another quote from the lender. This time, you must select an amount less than what you selected the last time. The rate of interest usually changes depending on the loan amount.
The bottom line
It is obvious to doubt borrowing potential when credit scores are in the worst state. However, there is some optimism for you. Direct lenders are ready to address your problem by allowing you to borrow without obligations.
You must have got all the relevant information you have been looking for. It will be helpful to ensure you can apply for loans with very bad credit scores. Attention to the facets discussed in this blog and send your loan request to the lender.
Description
This blog lets you know how you can approach a lender for loan assistance despite having very bad credit scores. Read it carefully before you apply for loans.
Williams Adams is the Senior Content Writer and Loan Advisor at Loansevents. He is passionate about finance writing and has written thousands of blogs for the top platforms worldwide. In more than 13 years of experience, he has worked with leading lending firms in the UK providing various loans. At Loansevents, Williams does the major task of writing researched-full blogs on multiple loans and financial concepts. He has done MBA in Finance in the UK to back his finance skills.
