Having a stable financial statement is very important for every single person on this earth who really plans to live a happy and stable life. Apart from rigorous hard work, we offer in our workplace it became really very tough to reach that point of financial stability sometime.
There comes many occasions where we need to have some extra money which we might couldn’t find in our saving accounts. So to compensate those needs of that extra money there is a term we all have learned is “loan”.
The loan is that particular amount of money which bank or another lender can provide us at the time we need according to our credit score. So in this content, we are going to look over some terms like credit score and also about bad credit loan which is a loan you can get even in a low credit score.
What is the credit score and how it determines the loan we can get?
So a credit scoring is a kind of scoring which can decide that what likable amount you can pay if and how fast you can pay the loan you are taking. So basically the range starts from 300-850 where 300 being the poorest score and 850 being the highest score.
According to the score only, it is more likable that you can get a good amount as your loan also. Now coming to the concept of bad credit score, so the range of bad credit score generally starts from 650 and the credit score decreases as the score decreases.
The person having a credit score in this range may turn up to have a higher rate of interest as they don’t have a trustworthy return promises. And additionally, the definition of this good and bad credit score totally depends upon the lender. Some doesn’t let any creditor below 650 or some do lend money to some having low score also.
How the credit score affect the rate of interest and borrowing?
As mentioned earlier credit score can decide a lot of things related to your loan and it does affect a lot of things also so the first thing which is affected by credit score is the amount of interest which you have to pay.
Those who have good and excellent score they have to pay comparatively very low rate of interest because having a good credit score means they are having a stable savings or stable source of income thus the lender decide a much low rate of interest and if we talk about bad credit score, they have been given a high rate of interest because the lender doesn’t have a surety because of the uncertainty of the credit score.
Below mentioned is a list that gives detail about how much rate of interest is required against each credit score:
- 760-850 credit score: 4.63%
- 700-759 credit score: 4.48%
- 660-669 credit score: 4.87%
- 620-659 credit score: 5.03%
- 619- and lower credit score: 5.58%
If you have a low credit score how you can get a loan?
There are two necessary things which you need to take care in terms of low credit score. Let’s just first discuss the first method which is if you aren’t in a hurry for the loan then it’s always better to improve your credit score within few months and it is not like that it is a very tedious thing to do.
It just needs only three important steps to be covered which comprise of firstly making all payment on time because this is the main factor which rectifies the credit score massively.
The second this is low credit utilization which means try to use the credit balance as minimum as possible and the third main thing is don’t go for any new credit application if you are thinking to rectify your current credit score. But there aren’t many chances when there is a lot of time with us so we have to go for that emergency option.
When you need to have an emergency loan, a low credit score may act as a hindrance because the loan got called off many times. So the bank migh take some interview so be prepared while you have an appointment with the bank with all the documents which might be needed.