Until you start looking into taking out credit, you probably haven’t given your credit rating much thought. But when you have an unexpected expense, like a medical or vet bill, your credit history can become very important – you might find it more difficult to get the funds you need if you have bad credit.
What Does it Mean to Have Bad Credit?
Having bad credit means that you have a poor credit history, which can be due to a number of factors. Usually negative marks on your credit report are outside of your control – making a late payment won’t be intentional, but it can impact your credit rating for a number of years.
You might alternatively have a low credit score if you haven’t taken out a lot of credit previously. To show that you’re able to handle your money well, you need to make the due payments towards a mortgage, credit card, or other form of credit commitment. Lenders are then more likely to offer you unsecured loans – they know you’re capable of making repayments.
Can I Get a Loan If I Have Bad Credit?
Your credit rating isn’t always the only area looked at when taking out a loan. With bank loans, as these are generally for larger amounts of money, your credit score is important. But with smaller, short term loans, things like your employment history are taken into consideration too, so you don’t need perfect credit.
It is important to remember though, that loans for bad credit are not intended for long term borrowing. If you need money to get you through to your next paycheck, even if you have bad credit, you should still be able to get the funds you need from lender. If you want help finding a loan from a direct lender, you can also use a credit broker.
How Do I Improve My Credit Rating?
If you have bad credit, you can help build up your credit score by showing you are able to pay back on time or early. This can be a bit of a catch 22 – if you can’t borrow from a bank, how can you show them you’re able to pay them back? That’s why short term loans are so beneficial to those with a poor credit history – you can repay payday loans and demonstrate to other lenders that you can handle your money well.
If you want to check your credit rating, you can do so for free via Credit Karma. You can check your current Trans Union score, how to improve it, and which loan products you’re likely to be approved for based on your rating.