How to Get a Loan with Bad Credit History

Your credit history is important if you’re trying to get a loan. Lenders use your credit history to assess if you’re financially capable to pay your loans on time based on a record of your past loans and even how you handled other dues or bills.

If your credit history is good, you have better chances of getting the loan you’re applying for, including the amount and terms you indicate on your application. In short, having good credit means getting a good deal from lenders.

On the other hand, you might have a hard time getting approved by banks and other financial institutions due to bad credit history. Being late on loan payments and not repaying the money you owe from lending institutions are top reasons why you might suffer from a bad credit rating. It’s also possible for credit companies to know if you have cancelled credit cards with unpaid balance, issued bounced checks, or foreclosed properties. All of these records can limit your loan options, as you might be offered smaller loan proceeds or shorter repayment periods.

Here are some tips on how you can make yourself more eligible for a loan despite having a not-so-good credit history.

1. Give online lenders a try.

Online lenders like Cashalo have changed the lending and borrowing landscape in the Philippines in many ways.

For one, online lenders can be your next best alternative if you don’t get approved for a loan by banks and other financing companies. This can be helpful when you’re caught in a financial emergency and you need cash fast.

And because everything from loan application to cash disbursement happens online, you can track the entire process directly from your personal computer or smartphone.

2. Have a co-signer.

A co-signer, also called co-maker, is a person who agrees to pay back the loan you took out in case you’re unable to pay it. Thus, you should look for someone with good credit as it will help the lender decide more favorably on your loan application.

Just be responsible enough to discuss with your co-signer how or when you’re going to repay him or her for taking over your own personal loan since it’s possible to have a co-signer who’s not part of your family, such as your officemate or friend.

3. Use collateral.

Collateral is another way to get approved for a loan. Offering collateral to a lender in exchange for a loan shows that you’re serious about paying off your loan, since failure to pay may result in your collateral being forfeited. Examples of items that are often accepted as collateral include gadgets, home appliances, jewelry, and any other possession that has monetary value.

4. Join a credit union.

Credit unions are small, informal money lending organizations that are more willing to work out a loan package with you despite your current credit standing. You can often find them in your local community, serving as a savings cooperative at the same time.

By being a member of the group, you can apply for a loan through the pooled savings fund of all the other members. Interest rates are usually low, although you might not be able to stretch out the repayment period as long as you want, to give way to other members who are also trying to secure a loan.

5. Build your credit.

Building or rebuilding credit while borrowing may seem counter-effective, but making a firm resolve to get out of bad credit is a good start. From there, you can take small steps so that eventually, you will reach your end-goal.

For example, each time you apply for an online loan in the Philippines, you can use it to pay your other debts, especially those that charge higher interest rates, such as credit cards. For companies that are doing credit check, prioritizing your credit card bills is a good reflection of your commitment to re-establish your status as a trustworthy borrower.

This makes it important that you shop for a lender who is legitimate and who doesn’t take advantage of your situation by charging unreasonably high interest rates. Accredited lenders will only enforce terms and conditions within ethical and legal boundaries.

Bad Credit History Is Not the End of Things

If you’re dealing with bad credit at the moment, you need to know that all hope is not lost. Little by little, you can still improve your credit standing to get loans in the near future. It may take time to get to that stage, but the good news is there is now a way for you to take out short-term loans from Cashalo.

Cashalo gives fast approval to qualified borrowers, and money is released in as fast as 30 minutes. Plus, Cashalo’s online loans carry reasonable rates that you can pay off more easily, so you can avoid getting yourself trapped in high-interest debts again.

About Cashalo

Cashalo is a fintech platform that delivers digital credit to Filipinos – helping them elevate their financial well-being. All loans under the Cashalo Platform are financed by Paloo Financing Inc., with SEC Registration No. CSC201800209 and Certificate of Authority No. 1162

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Address: 16F World Plaza, BGC, Taguig City, Philippines 1634