The very concept of direct lending is oftentimes misunderstood. These lenders try to simplify the complicated steps of traditional borrowing. It is through offering loans with friendlier terms and conditions.
Indeed, getting financial help in extreme situations is easier with direct lenders. However, it does not mean that they do not have basic lending conditions. It is critical for any borrower to understand the requirements which are going to be flexible.
Expecting to get a very bad credit loan from a direct lender is an extreme situation. The good news is that it is doable provided the loan applicant is capable of meeting the basic requirements. Due to very poor scores, they are already in a vulnerable state.
This is indicative of high risk factors. Thus, the lender needs to be very careful while providing loan support. In this condition, fulfilling some requirements becomes mandatory as an attempt to mitigate risk.
If you are able to satisfy the lending conditions without any trouble, borrowing will be effortless. Otherwise, you might have to consider other ways of arranging money. Certainly, getting loan help with very low credit scores is not difficult but not effortless at the same time.
Find out why this is so by reading through this blog.
Your experience with borrowing with very poor credit scores
Do not treat very low credit scores lightly! It is alarming as your financial performance is very poor. Moreover, it shows how careless you are by not showing any improvement.
You must be holding a lot of debts or else your credit history should not be like this. It is time for you to pay attention if you are earning well but still have debts. With sufficient income, you must not face any problems in paying off usual bills.
However, if you do not handle your expenses carefully, you will create limitless debts. What should you do to be able to borrow easily despite very low credit scores?
1. Fulfil the requirement of a guarantor
Your financial situation is worse and you cannot promise successful loan payments. In this scenario, you can produce a guarantor who will take care of repayment. They cannot be any random person you know.
Their financial stature should be favourable by earning a stable income. In addition, their credit history should not be questionable. They must show good score to prove their credibility.
Above all, you must be confident about their financial behaviour. They should be someone from within your known circle.
2. Get ready to pay high-interest rates
Very poor scores are risky according to the lender. Very few loan providers might get ready to provide loan help. Direct lenders are among them but might have strict requirements.
If you are not able to provide a guarantor, you must agree to pay high-interest rates. This is another way of downsizing the lending risk. However, heavy interest directly questions your affordability.
You already have a lot of debts to manage. In this circumstance, it will be difficult for you to arrange further money to pay the heavy borrowing cost with a high APR. You might have to consider this option if you do not have any other option.
If you have to agree to this condition, it becomes mandatory to restrict your expenses.
3. Be willing to provide collateral
What if you cannot provide a guarantor and cannot pay high interest? It does not mean you have come to a dead end and you must give up now. There is a ray of hope still left for you.
Get ready to pledge any asset you have to get loans. Although defaults would mean loss of assets, you can take a chance. You can get funds which you can further use to complete pending payments.
The best thing about providing collateral or a guarantor is that you can expect better rates. These factors reduce the risk exposure and the lender will have no problem in processing your request. You do not have to confront high charges because of very poor scores.
This can happen because of collateral. You need to be careful about covering loan payments. This is because non-payments get easily reflected on your credit history.
4. Credit improvement efforts
Very poor scores are synonymous with high risk. The least you can do is to start your credit improvement journey. It may sound impractical as your financial condition is a total wreck now.
However, you must be prepared to work hard to enhance your credit scores. It is true that you do not have the required financial capability to afford to pay off the outstanding. Endorse a frugal lifestyle where you just focus on priority expenses.
Stick to basic payouts that are mandatory for you to sustain. The lender feels optimistic seeing your effort and might get ready to believe you with loans. No matter how hard the return journey would be, your efforts really matter a lot.
5. Streamlined loan application process
One of the reasons why getting loans from a direct lender seems easy is this seamless method. However, you need to go through the above factors to be able to reach upto this point. You can go ahead and fill out the application if the lender has no problem with your circumstances.
Once you fetch the loan form, you can complete it within minutes. Fewer details should be provided in the form without completing any documentation. Receiving a reply from the lender is easy as everything takes place online.
You do not have to meet or greet anyone for a loan application. Your virtual application is enough for the lender to understand your present financial standing.
The bottom line
Very poor scores are one of the biggest obstacles in getting loans. Poor scores are still acceptable but not very poor ones. Take note of the aspects that can influence the borrowing process.
Lisa Ann has developed a well-experienced professional career. From managing the staff of more than 50+ loan experts at Fastmoneyfinance to boosting the delivery of various loan offers, she has acquired many challenging roles to come out with the best results for the company. Lisa Ann is a Senior Content Author and the Chief Financial Advisor at Fastmoneyfinance. To back her massive experience in the UK’s financial industry, she has the postgraduate degree and diploma in Business and Finance.