Like it or not, in today’s modern world credit scores are a part of life. Whenever you take out some form of credit, a record is made of the transaction, and your repayment behaviour will be logged. If you keep up to date with your repayments, you will gain a credible score. If you don’t, your score will suffer, and this is when knowing more about loans for bad credit could be useful.
About credit bureaus
Credit scores are created and maintained by credit bureaus. The three biggest bureaus worldwide are Equifax, Experian and TransUnion. There are many more besides, and they tend to cover specific geographic regions.
For example, while Experian and TransUnion are the biggest in both the USA and the UK, Compuscan and XDS are very active in South Africa and are spreading their coverage across the African continent.
Credit scores vary from one bureau to another
All of the various bureaus compete with one another. But as with any competitive niche, the companies that operate within them will always operate slightly differently. The various offerings that they make to lenders determine their success.
They all bring something slightly different to the market. But what this means is that no two credit bureaus’ scores of an individual will be the same. If ever they are, it’s quite a fluke.
If you’d like to know a little bit more about how the three largest bureaus operate, an article entitled “What you need to know about the 3 main credit bureaus” on the Credit Karma website makes for interesting reading.
Don’t act like a headless chicken
If you have a low score and you find yourself looking for loans for bad debt, you need to keep a cool head. The worst thing that you can do if one particular lender has refused you is to start running around like a headless chicken, applying to all and sundry in the hope that one of them will grant your request.
Rather than raising your chances of finding a loan company who will play ball, making multiple applications will have precisely the opposite effect. The reason is that all applications, including those for loans for bad credit, get logged. Each refusal is recorded and will appear on your credit report, lowering your credit score even more.
So, rather than going into hyper-drive and sending applications out to every Tom, Dick and Harry, you need to think smart. First, find out all you can about having a low credit rating and the impact this has on you. Second, set about finding lenders that specialise in loans for bad credit and choose one to approach.
All money lenders want to lend. It is after all their raison d’être. But by the same token, they don’t want to generate bad debts. However, some are willing to hear you out if you have a low credit score. They may seek more information from you than usual, concerning how you expect to keep up with repayments; but they will go that extra mile.
Loans for bad credit can, if you are not careful, only make a bad situation worse. No one wants that, including you. So, before you start looking for a loan, do your research properly and ensure you will be able to pay the loan back according to the agreed schedule.