All of us, at some point in time, experience uncertainties in life. When you think you have planned your finances well, an unexpected expense will ruin your plans. It will not only shake your finances; sometimes, you look for ways to gather enough money to deal with them. At that time, loans were an ideal choice. You do not have to ask for money from anyone and can repay the loan in easy installments without any financial burden.
The only challenge here is whether you are eligible for a loan or not. We often do not pay attention to small things like paying the taxes and clearing our dues timely until you need approval for your loan application. Getting a loan very bad credit is next to impossible, provided you are ok with a small payday loan from a direct lender.
Factors Having A Direct Impact On Your Score
Let us dig deeper to understand the factors that directly impact your credit score and further discuss how they impact your loans.
- Not paying your utility bills before their due date puts you on a defaulter list, and it directly takes down your credit score. Moreover, even if you pay them a day after the due date, it will not work in your favour.
- If you have already taken some loans and lag behind in the instalment clearance, it is another factor behind your degraded score. The lender would know you can not pay back, so there are negligible chances he would lend more money.
- Spending more than you earn and having an imbalanced financial status also lowers your credit score, putting you in a tough spot. It will indicate that your expenses are more than your income, and you do not have a steady source to ensure a timely repayment.
These are the fundamental factors that lead to a poor credit score. Let us see how this score impacts your loan.
Impact Of Poor Credit On Your Loan
- You cannot prove your eligibility for a loan, and there are higher chances of a lender rejecting your loan application. If you want to apply for a home loan, there are no chances of getting the money sanctioned without an excellent financial history and credit score.
- Due to a poor credit score, you cannot apply for a surprisingly high amount as a loan. However, you may still be eligible to get small payday loans, like 300 loans or 200 loans. You can get these loans from the direct lenders who do not check the credit history and approve a smaller loan within a few hours.
- There will be a higher interest rate on the principal amount you loaned to compensate for your poor score if you want a loan very bad credit.
Thus, it is fair to say that you should stay watchful of your credit score and try to maintain it to get any loan you want. Keep your financial sheets clear and crisp, avoiding any chances of rejection.