You can never tell when you need a large amount of money because they tend to happen in times when you least expect it. No matter how many backups you may have, it may not always be enough and in some cases, it would just be short of what you need.

When this does happen to you, it is ideal to get a personal loan to support your emergency expenses. However, getting a personal loan will be tricky, especially if you apply through the bank and they see that you have a bad credit rating.

Bad Credit? What’s that

When a person has a bad credit rating, this usually means they have previous transactions which they have not paid in time, defaulted on their payments or declared bankruptcies. These transactions are often noted in one’s credit history, which banks and lenders look into to determine if you can pay all forms of credit – from credit cards to personal loans.

So, what do you do?

Here are some tips you can try out when you need to get a personal loan:

  1. Try loaning for a small amount

It is a given that people with bad credit score will not be able to borrow a large amount from the bank through their loans considering that their credit score reflects their capacity to pay.

When this does happen, it is always recommended to improve one’s credit score before they apply for a larger loan.

In order to start, you can apply for a small personal loan and do not miss any repayments for it. Make regular notifications on your phone, ask a friend or family member to remind you or even note it on a large calendar, and even pay in full as much as possible.

Rebuilding your credit often entails being able to pay during the allotted repayment schedule since this will show the bank or the moneylender that you can pay your loans even if you have a bad credit rating.

If you go through this route, you may need to keep borrowing a small loan until your credit score is alright for the banks or moneylenders to let you borrow a large amount.

You can also revive your credit score by reducing all your credit bills, like credit cards and opening new subscriptions. You should also prevent yourself from asking another credit facility to check your credentials because this will reflect in your record.

  1. Do Some Debt Restructuring

When you have a bad credit rating, it often shows that you have an outstanding debt that you still haven’t paid. A good way to get rid of it is by paying all your debts first before applying to a new one.

If you are unable to pay off the debts, try asking the banks or the lenders if it is possible to get your debts restructured to make it easier for you to pay. Moneylenders, in particular, are flexible when it comes to restructuring loans if borrowers can prove they are unable to pay the loans regularly. They could remove or reduce the interest rate, extend the loan tenure or even offer other solutions that will make it easier.

Debt consolidation is another way to restructure debt and if you wish to apply for this, you can contact Credit Counselling Singapore to help you speak to your banks or lenders. You can also approach a credit advisor to assist.

Debt restructuring ensures that you will be able to pay all the money you owe various groups and ensure you can repair your credit history in time. Once it has recovered, you can be open to getting a large personal loan.

  1. Look at other fund sources

Banks are not the only ones who can help you with sudden money needs.

There are a lot of non-banking financial institutions in Singapore you can approach which are licensed by the Monetary Authority of Singapore. These institutions offer a wide variety of loans which reflects the same rates and benefits offered by loans offered by banks.

While these companies also look into your credit history before they approve your loan, they may have different guidelines on who to approve and who not to approve. They can even offer other loan programs that would work for you.

  1. Moneylenders

If all these other sources are not possible or available for you, moneylenders are your final choice to get funds for your needs.

Just like banks or financial institutions, moneylenders also offer loans for consumers based on their needs and it is usually with high interest. Interest rates can be at 4% to 15% each month, which can be daunting if you are unable to pay your loans.

Licensed moneylenders are meticulous as to which applications they approve because they rely on high-risk and high-reward loans. As a result, they don’t usually offer small amounts for loans since it will only give them the chance to collect a small interest payment. If you borrowed a small amount and borrowed from them, you will need to pay high interest and it may make it difficult for you to pay your loans.

You can still apply for personal loan with moneylenders, but before you sign with them, make sure you are well aware of their terms and conditions, repayment schedules and if there are clauses where you can seek debt reconstruction should you have problems. Ask the moneylenders if it is ok to think about it first before you sign up with them.

Final thoughts

When you have a bad credit score, don’t panic immediately when you find yourself out of funds for a specific expense. With the tips above, you can still get the funds you need. But remember, you need to be careful whichever solution you select because when you borrow money from a moneylender or other institutions or seek debt restructuring, you are expected to do your part.

Don’t waste these chances because if you fail to meet your responsibilities, borrowing money from these firms will become more difficult in the future.

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