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When you have a bad credit history availing a loan becomes the most difficult task. This is an adverse situation for anyone to be in and this can affect your loan approval as well. Individuals with a bad credit history are generally considered to be the 'most risky' borrowers. Lenders find it difficult to trust borrowers who have a bad credit history and the credit checks that are done prior to the sanctioning of the loan generally goes against them. The first thing that a lender will look at is the credit history or a person`s creditworthiness while applying for a loan.
But there are certain loan plans for those with bad credit history and these plans don`t require any credit checks and borrowers can get the funds they want. There are banks which give secured loans where those with bad credit are required to pledge a piece of property or other assets as security or collateral. There are secured and unsecured loans available with varying interest rates.
Personal loans can be availed for various needs such as a home renovation, medical expenses, outstanding on credit cards etc. But these loans will come with high interest rates and will most often require a co-signer. These loans generally have a short payback time. Lenders charge a heavy rate of interest on such loans as they are willing to take the risk assuming that the individual will pay back the loan.
But there is an advantage when you avail loans despite the bad credit history. Ensure that you pay back your loan within the allotted period of time. This goes a long way in helping to repair your damaged credit. Also ensure that you don`t default on payments and make your payment on time. Give the lenders ample proof that you got into bad credit due to some unavoidable circumstances. If you make an honest attempt to set things right then the lenders will look at your credibility and securing loans in the future will become much easier.
Try explaining to the lenders and give valid reasons as to why you got into bad credit in the first place. It could have happened due to sudden loss of job or due to some illness or prolonged hospitalization. Now that you are out of that situation, show them that you are on your path to recovery and make an honest attempt to rebuild your credit which may take quite some time but would be well worth it.