Qualifying for a personal loan with low or bad credit can be a bit challenging with banks and other lenders in South Africa.
However today I want to show you how to qualify for a loan with a low credit score.
While your credit score plays a major role in the lender’s decision-making, they’ll also look at other things such as your income vs expenses ratio.
Without wasting your time, let’s get started.
What’s a Low Credit Score?
Often, consumers never take the time to understand their credit profile yet get surprised why they couldn’t qualify for the loan they wanted.
So, a credit score is a number from 0 (very poor) up to 705 (excellent) that indicates to lenders your credit risk profile.
While having bad credit is always confused with being blacklisted, your credit score determines everything in the loan application process.
Your credit score is calculated and determined by credit bureaus in South Africa. These companies and organisations carefully evaluate your credit history and give you a number that banks and lenders use to offer you personal loans.
Bottom line:
You can still qualify for a personal loan with a low credit score but at a price, unfortunately.
Because you’re considered high-risk if your credit score is lower than 630.
This makes offering you a loan high risk, so you’ll get it at a higher interest rate for the risk and to cover the cost of the loan.
Getting The Loan With Low Credit Score
A few lenders in South Africa offer loans to consumers with low credit.
You can forget about getting a loan from the big-name banks in the country, they’ll never offer you a loan with a low credit score. They’d rather refer you to apply for smaller credit facilities such as store accounts and credit cards to build up your credit score.
You may not qualify for the loan amount you needed, due to the risk of your credit profile but some of these lenders are willing to take the risk.
These loans can be very expensive. And while they’re good for your financial situation, they may also end up affecting your credit profile negatively.
Before taking such a bad credit loan, ensure you understand the costs and terms of the loan.
Credit report:
First, you’ll need to obtain your credit report.
You can get a free credit report at MyCreditCheck.co.za, a service brought by Experian.
Lenders use this report whenever you apply for a loan, so it’s very useful to help you understand your ratings and where you need to improve your credit score.
Get quotes:
As indicated, there are a few credit providers that offer loans with bad credit or low credit score in South Africa. These lenders operate their businesses in full compliance with the National Credit Regulator (NCR).
Though they’ll charge you a high-interest rate on the loan, you’ll be sure to get the loan amount you wanted and start boosting your credit score.
Check out a full list of loan providers that can assist you today, with guaranteed same-day approval.
