Every person should understand, it is possible to urgently take out a loan with a bad credit history. Let’s figure out what is a bad credit history?
This is information on the promptitude in loan payments. That is, if you received money in debt, but repaid the amount on time, within the time specified in the loan agreement, then your credit score will not be spoiled. If there have been delays, this may be displayed in the your credit report.
This is information about your reliability. Financial institutions, including payday lenders, need guarantees about the client’s reliability. There are cases when borrowers treat their obligations in badly and do not pay the loan at all.
This is information about your capabilities. If your credit rating is low, it means that you simply do not have enough resources to pay it back and the financial institution should not put its finances in danger.
As you can see, there are several nuances that you should pay attention to if you want to select and take out loans for bad credit in CT, but are not sure about your credit reputation.
How short-term loans affect credit history?
The impact of small loans on credit history does not differ from that in the case of bank lending. Since all transactions are registered in the credit bureau, data on the borrower’s payment discipline are entered into the general history along with any other types of official debts to creditors.
Timely or early repayment of debts to online lenders contributes to the improvement of credit history. Considering the application, representatives of banks first look at the debts of recent years, and only then — at the debts that were long ago.
Overdue payments, uncovered debts, on the contrary, worsen your credit score. After all, MFIs, as a rule, issue loans $100-$5,000. And if a person cannot repay an amount equal to a monthly salary on time, it means that he cannot be trusted with a greater loan amount.
How to improve credit history with payday loans?
The fact that financial transactions in MFIs are registered in the credit history can be turned to your advantage. These institutions do not issue millions of dollars, do not work with long-term loans, and the interest rate in them is higher than the bank rate. These factors contribute to a more loyal attitude towards the borrower, reduce the thoroughness of the audit.
The payday lender will see your credit history, but even if it turns out to be bad, the chances of issuing a loan in CT will remain high. It will be possible to borrow a limited loan amount and with an unsatisfactory rating. Refusal is likely only in very neglected cases, if a person has an overdue large loan, or a rating of near zero. In most cases, the online lender will “close its eyes” to poor indicators and give the necessary amount on a short-term basis.
If you have a bad crdit history, banks refuse to issue a loan, you can use MFIs to raise your credit rating. Try to borrow a small amount ($100-$500), for up to 30 days, and return it on time. This will add a positive entry to your credit report. Later, repeat again, increasing the amount. Several operations of this kind will contribute to improving the financial reputation.
Using loans from MFIs to improve the credit rating, it is important not to abuse the opportunity. Too frequent (more often than once every 1-2 months) appeals, parallel submission of applications to a dozen organizations, a lot of loans for small amounts, sometimes work in the opposite direction. When you need a loan for a much greater amount, the bank will look at the credit report, and will see a lot of frequent small loans. As a result, employees may get the impression that you are constantly short of money, even small amounts.
Average erms for issuing small payday loans with a bad credit history
|Borrower’s age||from 18 to 65 years old|
|Interest rate||from 1% to 3% per day|
|Real annual rate, interest per annum||depending on the state|
|Maximum loan amount||$5,000|
|Amount of the first loan||$100-$1,000|
|Loan term||1-30 days|
|Consideration of the application||up to 15 minutes|
|Requirements||passport/ID card, TIN, citizenship of USA|
|Method of obtaining||credit/debit card, e-wallet|
|Additional documents||not needed|