A teenage boy once said that he wanted to learn complete finance before he finished his degree. Both parents were in a dilemma, they had to apply for two loans, one for the finance course which had a duration of twelve months and the BCom honours had a duration of four years. To make it worse their credit scores were around 625 to 650. They were worried that they had bad credit.
Nevertheless the parents took short term fee loan, in both cases, and today their kid is on his way to joining a startup in their finance department. So, what we at Creditap want to tell you is this, bad credit does not mean you will not get funded.
Let us tell you that short term fee loan will pay for your school fees, your college fees and it allows you to pay for your career enhancement programs. It is also built for professionals.
Let's start with what is bad credit
Bad credit history means that the borrower has some difficulty in keeping up with repayment of dues. This data tells lending companies that such a person may not be responsible in repaying the loan.
However lending companies may still want to underwrite you based on analysing a few risk parameters.
Here is how you can get a loan with bad credit:
Find several loan aggregators: there are several financial institutions that will underwrite you. They will take risks on your bad credit, which means your interest rates will be higher than usual. However by shopping around several banks and loan aggregators you will find the best loans that suit you along with competitive interest rates. Your search for a short term education loan gets easier this way.
Steady your life: If your monthly income, location and job profile is steady then you will find yourself a loan soon. As a parent please work on financial stability because this is the only thing that gets you a loan.
If there is any improvement in your job and say there is a hike which makes people believe that there is a secure job then the loan will be approved at the earliest.
Joint loan or have a loan guarantor: A joint loan with the spouse or a guarantor gives you the best option to secure a loan because they may have good credit or security. This reduces the risk for the lender because they believe that the guarantor has the ability to repay your short term loan.
NBFCs: as India is growing in consumption several non-banking finance institutions have emerged to fund people with low credit scores. However remember the interest rate can go up to 40 percent per year in many cases.
Finally try to take smaller loan amounts for your short term fee loan and you can also apply online for short term loans.
All things considered there is greater guarantee of a loan if you have good fixed income and a higher credit score because you pay your bills on time.
We urge everyone with bad credit to work towards good credit otherwise there will be a further dip in the credit score which may not be very good for the future of your child's education or your own professional reskilling.