Having a poor credit score is obviously not pleasant but depending on some criteria, it is possible to improve or even to get a loan.
Why is my credit score important?
Having good credit history comes in handy in many situations. If you need approval for things like mortgages or a loan for a car, decent credit history can help you receive it and allow you to borrow larger sums of money. Even a contract for your smartphone can be easier to get. Here are some more things that you can get if you have a good credit history:
- tenancy agreement
- credit cards
- loans for vehicles, opening a business, for expensive purchases
- phone contract
There are many other ways in which you can benefit from a good score.
What can give you a bad credit score?
Even if your credit score drops, you will probably be able to use it to secure some loans or services. A bad credit loan can give you more options and loans and mortgages of this kind have been specifically developed to offer consumers ways through tough financial situations. The downside is usually high-interest rates and potentially a larger deposit as well as other fees that are often much higher than those on other offers.
Poor credit can make it much harder to access certain benefits. If you have to file for bankruptcy, your credit score will reflect this and most financial service providers will be able to see it when you give them access to it after requesting a service. If you already have some sort of credit agreement but fail to make payments or are late with one or more transactions, you are also at risk of having a bad credit score.
How can you qualify for a home loan with a bad credit score?
While bad credit mortgages are available, there are certain requirements that need to be met in order to secure it. These could include
- Your income
- The amount of debt
- whether you have any other sources of income or savings available
You need to expect that the deposit will be higher than for those who have a good credit score. Also, the interest rates will probably be higher. It’s important to determine every detail before applying for a home loan or any kind of loan, especially when you have a bad credit score.
Consider the ways in which you can improve your credit score, before taking out a new loan, if you can help it. For example, by using your credit card less or by using a prepaid card that allows you to control your spending. If you find yourself in a difficult situation, seek help from an expert or someone that you trust.