Do you have a bad credit score? If yes, this must have increased your struggle to obtain financial services and deprived you of the best features of the financial products. Undoubtedly, having a bad credit score is the reason for not making your payments on time.
But you can’t always blame yourself for having a low FICO score because nobody has any control over situations. On the one side, your average score limits your options with high-interest rates. On another side, there is good news for you because we have brought you a perfect solution to apply for a loan.
Yes, loans for bad credit in South Africa are a great choice of people you can apply for and get instant approval. We have some reliable direct lenders willing to help you with a personal loan 24/7 with bad credit.
What is bad credit?
Bad credit belongs to your creditworthiness which has data on how you deal with finance for making payments after taking any financial assistance. Bad credit means- for the lenders to think about whether or not to help you further. If yes, then on what conditions?
A credit score is a 3-digit numeric based on your payment habits controlled by significant credit references agencies like Experian, TransUnion, and XDS in South Africa. Their job is to maintain your credit score based on your current financial status.
If you want to apply for a traditional loan in South Africa, your credit score should be at least 600. Below we breakdown the credit score ratio in South Africa for a glance:
| Credit Score | Rating |
| 670+ | Excellent |
| 650-669 | Good |
| 634-649 | Average |
| 618-633 | Below Average |
| Below 618 | Very Poor |
Financial institutions consider these ranges of credit scores most when they need to think further about your loan application. However, there are other factors they take into for further decisions, including your income, debt-to-income (DTI), employment, and much more.
What meant by bad credit loans?
Bad credit loans in South Africa are a type of financial service for people with a low score disqualified for conventional loans. There are many uses for such types of loans that borrowers can use, depending on their financial difficulties.
Still, you can use the funds to pay medical bills to cover rent, educational fees, car repairs, and much more. You can’t commonly have good terms as good credit holders can because they have maintained their FICO score well.
Most importantly, bad credit loans come with high-interest rates that you must pay on your next payday. So such types of loans are the most suitable option for people who need money in a hurry to overcome emergencies. But some reputable direct lenders also offer some excellent terms to bad credit holders.
Top 5 ways to get loans for bad credit in South Africa
There are some valuable ways of getting loans even if you have a bad credit score in South Africa. Many people are unaware of these tricks, but you are lucky enough that you are supposed to know all of them.
These tricks can benefit those who want to apply for loans for the first time. Aren’t you one of them? If yes, you will not return with empty hands from here because we want financial wellness for all South Africans.
Top 5 loan options for people with bad credit:
- Secured loans: You need to carry any valuable thing as collateral, such as your car, or it can be your home. Several lenders offer you money based on your collateral value. But you shouldn’t forget- you may lose your asset if you don’t repay their money.
- Co-signer: A co-signer is responsible for paying what you owe and getting approved for the loans. You can take their help to boost the chance of loan approval. But they are liable to make payments if you are not repaying your loan on time.
- Credit Unions: This is also known as a non-profitable organization to take you out of a financial ditch. Credit union loansare offered at low-interest rates and favorable terms. You can resort to this option with your lower credit score.
- Payday loans: Take this at last when you already try all your possible options to borrow money. Payday lenders offer payday loans for bad credit peoplein South Africa. These loans are easy to apply for and provide instant money into your bank account, but they are offered at high-interest rates.
- Online lenders:Many online direct lenders are willing to help you with quick assistance, whether you have bad credit or no credit. But you have to pay such funds with excessive interest charges. Thus, you must be aware of the terms and conditions of the loans before you step ahead.
What to consider before getting a loan with bad credit?
Your bad credit restricts you from many benefits you can only get with your good credit score, which matters for all lending institutions. When you have bad credit, you should consider several things before switching to loans.
It would help if you kept your eyes open when searching for loans with a bad credit score. Generally, people with lower scores face some challenges in getting approval and are deprived of all the benefits associated with products.
Some key points to consider before applying for a bad credit loan:
- Interest rates: Due to bad credit, you have to pay a little extra as high-interest rates. You have to rest assured by your lender that you can afford the loan with high-interest rates and monthly payments.
- Fees: Many lenders charge extra fees for loans with bad credit. Knowing the overall fees and cost helps you estimate how much you will have to pay and proceed further.
- Repayment terms: The length of the loans is essential for consideration because everyone wants to get free as soon as possible. As long as your repayment goes, you will have to pay fewer monthly payments, but more interest charges won’t stop chasing you.
- Credit boost: Is the loan a great way to improve bad credit? You have to think about it precisely. It is true; making payments on time for your bad credit loans will make your score jump. Check if your loan is capable of positively increasing your credit score.
- Search alternatives: There are some other options available for you. These are also known as safe and secure alternatives to bad credit loans. All you need is- to look around because they will solve your money-related problems.
How to improve your credit rating for a loan?
Since this may seem like a curse to you, that makes you helpless to get financial services. You can boost your low credit with the help of some practical tips that you haven’t heard before. These tips will tell you how to improve your bad credit score.
But you can quickly improve your bad FICO score to apply for a loan quickly and conveniently with the best features.
Some useful hacks to improve your credit rating are:
- Pay on time: It is one of the most important things you don’t have to forget when you want to improve your credit score. You have to develop your habits of making payments on time to see some changes.
- Check for errors: You can get a free copy of your credit report from the credit agencies in South Africa. It helps you understand if your credit report is faulty with some strange errors. You have to dispute them.
- Pay-off bills: Paying all your bills will clear your credit history. So, you have to pay all your bills on time that will work best for you.
- Credit utilization: It is a good idea to use a tiny part of the credit that you have with you. Also, you have to avoid opening many accounts at the same time.
- Pay more: If you want to boost your credit score fast, you can also increase the amount for payments as much as you pay on the due date or before as soon as you can see some positive changes to your credit score.
Using the MoneyStar, you may get from R100 to R35,000 in just 5 minutes.
Applying won’t affect your credit score
Micah Sedres
MoneyStar expert Micah strives to navigate finance niches like credit cards, loans, and mortgages easily. She helps hundreds of readers in credit building and provides money management tips. After regularly working for brands like Businesslive.co.za, she joined the MoneyStar.co.za team as a staff writer to develop credit product reviews and comprehensive guides mainly focused on credit scores and loan/card offers.
