Yes, you may get a loan for a bad credit score. However, approval depends more on the individual’s affordability than your credit record. Lenders analyse your credit history, pending payments, income, debt-to-income ratio, credit utilisation, bank statements and repayment capacity.
Regulated lenders conduct a credit assessment before approving a loan. It helps you and the lender determine how much you can repay given your finances.
However, having a bad credit score means interest rates remain high on a loan. The payout remains lower, and the repayment terms are strict. You may need to provide a guarantor or collateral in some cases. If you want to improve the chances of getting a loan and want an affordable one, the blog may help. It discusses the strategies in detail.
7 ways to improve the chances of getting bad credit loans
Here are some strategies that might help you improve the chances of getting bad credit loans online in Ireland :
- Check your Credit Register report
Request your credit report from CCR ( Central Credit Register). It contains information like payment history, personal information, employment information, and debts. You must analyse it and report the inaccurate debts to the CCR. You must review the report to check if:
- Closed bank accounts still show up as open
- Incorrect personal details
- Whether your residential, contact details and email ID’s information is updated
- Duplicate entries
You can request a correction by contacting CCR. Applying without analysing the basic credit report details may affect the terms and interest rates you may qualify for.
- Pay existing bills on time
Consistent repayments demonstrate your strong financial position. Set up reminders or direct debits for important commitments. However, it is only ideal if there is enough money in your account to avoid additional charges.
Prioritise bills like:
- Rent or mortgage payments.
- Utility bills.
- Existing loan repayments.
- Credit card and overdraft payments.
- Court-ordered or legally required payments.
Do not take out another loan to repay an existing debt. If necessary, discuss the chances of negotiation with creditors.
- Try to reduce existing debts
Lenders consider your current financial bills and commitments while checking affordability. A high level of existing debt may reduce the amount you can borrow. This is even when you have a regular income.
You may improve your loan application approval chances by:
- Paying down expensive overdraft or pending credit card balances.
- Avoiding unnecessary expenses or shopping for luxuries.
- Clearing small debts to reduce the credit utilisation.
- Cancelling unused credit facilities or subscriptions if appropriate.
- You may consult a debt adviser if you want to consolidate debt. It may help you improve your credit history and qualify for better interest rates.
Note: Debt consolidation may not always prove cheaper. A lower monthly payment may still result in a higher total repayment if the new loan runs for a longer term.
- Choose an affordable amount
One must identify the actual amount one can afford to repay. You can check that by using eligibility checks or pre-qualifying with lenders. Accordingly, you may apply for an amount you can afford and that meets your needs completely. If you can, try to borrow less than the required amount. It increases the chances of getting a loan approval despite bad credit history.
You can calculate the ideal amount to borrow by checking your disposable income.
Disposable income=monthly income−essential spending−existing repayments
Disposable income is the savings you have after meeting essential costs and debt payments. The money that is left after meeting liabilities must be sufficient to repay the instalments. It should not affect your basic lifestyle or financial wellbeing.
- Prepare the income proof/documents
The document requirements may vary according to lenders. Therefore, you must be ready with the basic documents that you may need to provide. Here is the list that you may follow :
- Recent income proof – full-time/part-time/self-employment/pensioner
- Bank statements of the past 3-6 months
- Proof of social welfare income (if any)
- Proof of address (current address)
- Identification proof- driving license/ID/passport
- Details of existing loans and regular expenses
Self-employed applicants may also need to disclose accounts, tax documents or evidence of regular business income.
Never inflate your income or hide debts. Providing inaccurate information can lead to rejection or may affect your future borrowing capacity.
- Make targeted applications
Never make several applications directly within a short period. This is especially true when you are seeking short-term quick loans for bad credit in Ireland. These loans are ideal for meeting financial emergencies. However, making multiple applications may affect your credit history and chances of getting a loan. Instead, you must :
- understand the eligibility criteria first
- pre-qualify to understand the approximate costs
- apply with a quote that you find suitable and affordable for your income and finances.
Always read the agreement, whether the check is a direct one or a no-obligation one. Generally, the initial credit assessment is a no-obligation one and does not impact your credit history. However, you must still enquire about it from the lender.
- Check the guarantor possibility
If you want a huge lump sum but lack decent income or credit history, a guarantor may be required. Never provide one unless the lender asks you to. If they do, a guarantor may help you qualify for a higher amount, better interest rates and flexible terms. They are responsible for the payments only if you cannot repay the dues.
A guarantor should be someone upon whom you can rely for finances. If you have someone like that, then you may consider a guarantor loan. It is especially true when you need a higher amount.
Before asking someone to act as a guarantor, both parties should understand:
- The total amount repayable.
- The repayment schedule
- What happens after a missed payment
- How the arrangement may affect the guarantor’s own borrowing.
- Whether the guarantor can afford to cover the debt.
Note that a guarantor should never agree simply because they feel pressured.
Bottom line
These are some ways to improve your chances of getting a bad credit loan in Ireland. Identify how much you need and can repay confidently. Check and compare the loan APR, interest rates and total loan costs. Accordingly, apply for an amount that meets your needs and is affordable on your budget.
Hudson is a graduate of banking and finance and works as a financial consultant at MyLoansBoat. He has a professional qualification to counsel people about money management. At MyLoansBoat, his key duties include shortlisting applications of borrowers and counseling them about credit score improvement, building an emergency cushion, retirement funds, and getting rid of debt. He is an ardent reader of finance books and uses the gained knowledge to help people with their finances. He also writes for the company’s blog on various topics like budgeting, investing, saving, debt management, joint finances, and the like. His aim is to dedicate his life to helping people have a debt-free life.
