How bad credit lender decides if you are a safe bet or not?

Of course, the new age lending and lenders can help you during a poor credit situation with bad credit loans. However, they need to consider certain things before approving your loan. The concern is for several guidelines, which are not stringent though but are part of the process.

You and your financial situations are judged on several points. What are those points? Want to know? 

Here they come –

How consistent is the bad credit situation 

This is the very first cause of the curiosity of the lender. Bad credit loans are customised according to your financial circumstances. If you have a consistent poor credit situation then there can be less relaxation in rates during deal customisation. But in case it is inconsistent then you are a safe case to consider.

Repayment capacity

The lender needs to know your affordability against the loan amount. If that is fine, it becomes easy to consider you for the loan approval.

Things that prove the repaying capacity are:

Salary Slips

Bank statement

Additional income (if any – from rent, freelance work, part-time job etc.)

Recent financial behaviour

Maybe something happened in the history that pushed you in poor credit situation, but what about the current finances. A lender wants to know how you are performing in the current times. Are you paying your bills on time or not? Usually, a record of the last three months is more critical and can change the game.

Financial association with your partner

If you have any financial association with your partner (wife/husband) it shows in your financial commitments. Also, it occupies a considerable part of your creditworthiness to qualify for other financial products. If there is any big obligation then the loan deal is sure to get affected. If the obligation is small, there is more space for the lender to provide varied flexibilities in the loan amount, rate quotes etc. This also affects the tenure of the loan. For instance - you have applied for 12 month loans for bad credit from British Lenders but your joint obligations are such that leave you eligible for only up to 6 or 9 months tenure.

Your name on the electoral roll

This is the place where finance companies always check your name. It tells about your identity, what is your address and also about the people you live with. If you are not registered here then get it done NOW. Also, in case you have changed your address then register with the new address. This is necessary because someone else can do fraud or crime using your old address and that can put questions on you. Obviously, this can have a very bad effect on your finances.

DO THIS before applying for a loan to look like a safe bet

After knowing what a lender considers to judge the repayment capacity, you should do something that can make them approval game easy.

TRY TO IMPROVE CREDIT RATING

To show the lending company that you can pay the loan on time, it is best to improve credit score before applying.

Close unused credit card, bank accounts etc. – Did you know that the financial products that you are not using anymore keep affecting your credit records. For instance, a bank account still shows in your financial commitments. You are not using it but at the same time not maintaining the minimum balance and if it goes in negative, the impact is sure to show on credit rating. Close them all to show more space in your affordability limit.

Check credit file – Check your credit file before applying for a loan. Sometimes due to some wrong details mentioned in your credit file, the credit score degrades. From address to the spelling of your name, every smallest information should be correct. If there is anything wrong then get it rectified or removed. Every responsible person should do this as it is necessary to keep in knowing what is happening with the financial records.

A credit file is your face for the financial industry, the people and companies in the money world know you through this. If it is updated with the latest information, the right thing goes forward in your name and that has its own benefits.

If you are planning to apply for bad credit loans, the information above can be your guide. Use it well to get the most out of the opportunity.