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A personal loan is when a financial lender lends you money for personal use. Personal loans can be used for many different reasons and aren’t limited to one area. There a lot of different types available, but your credit rating plays an important role in what type of personal loan you will be approved for and what ones you have access to. The majority of personal loans require you to have a good credit history and a bad credit history or negative marks can limit your options.
Personal loans are extremely common and work like any other loan. The financial lender will lend you a certain amount of money so you can make the purchases or pay the expenses you need to. Your lender will set out how much you borrow and the specific terms of your loan including your interest rate. You then pay back the loan in regular instalments, including interest.
Personal loans are widely available from banks, lenders and credit unions. They can be used for almost anything. From paying bills, to purchasing a car or going on a holiday. When you take out a personal loan, you will be required to make repayments. Repayments are typically made monthly but in some cases they can be made weekly or fortnightly too. Your repayment is made up of your principal (the original amount that you borrowed) and the interest accumulated on this original amount.
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Your credit file affects your ability to access personal loans significantly. Before a lender approves you for a personal loan, one of the requirements is checking your credit file. The financial lender will examine your file and check for any bad marks or warning signs such as late payments, loan defaults or bankruptcy. Your credit history is one of the lenders best indicators of your ability to make repayments based on your past with credit. Credit history is typically indicative of your capacity to successfully make repayments and your past dealings with credit. If you do have a bad credit history and any negative marks on your file, it will limit your options for accessing personal loans and may lead to you getting rejected. You may still be able to be approved for a personal loan if you have a bad credit history but it will be more difficult.
If you do have bad credit, there are still some options available to you to get a personal loans.
Fortunately, there are some ways to assist you improve your credit and improve your chances of being approved for a personal loan.
Get your credit score and comprehensive report now!
If you have bad credit, you'll find that applying for a personal loan is no easy task. However, there are steps you can take to slowly improve your position so you'll look more favourable to lenders. Patience and diligence is the key to getting your financial life back into shape, so you have more options when it comes to loans.
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What is my credit score?
Hi Nigel,
Thanks for your message and for visiting Finder.
You may request for your credit score through Finder. Simply enter all the correct data listed in your driver’s licence to get your credit score.
Hope this helps! Feel free to message us anytime should you have further questions.
Cheers,
Nikki