Although the average man would always want to avoid debt and would not want to get into a huge debt that is unmanageable, yet is also true that the common man uses a credit card in day to day life the most. The reason behind this is not to get into debt, but to make things easy and simple. The flexibility to travel cashless, the tension-free purchase when you don’t have cash enough and yet you know you can pay for this small loan on the card the next month as you get the salary, and the simplicity of use; all make things simple and easy for the common man.
Hence credit cards these days are not a luxury but a necessity if you look into it that way. Else if you always have enough money to get your hands into whatever you want, why would you ever borrow! But, you can be denied a credit card simply because you are in a bad credit situation. And similarly, you may be denied many such small loans, personal loans, auto loans, and all for the same reason when you need it the most.
The denial can make life worse
Denials from small microfinance companies to big banks, all can be bad and can get worse with time to affect decisions of day to day life, and also your credit score and credit history. That’s because, every time you apply for a credit card or microloan, or personal loan or something like that, your credit history and score get internally investigated by the lender, and this checking by the lender and the rejection upon that also gets recorded in the credit history, which further lowers the score.
Constant denials can be very depressing. When you get constantly denied by many financing companies for loans of any size, then you should stop trying in a general way and try it a different way.
Bad credit loans and credit cards
Bad credit situations do occur in the life of a common man. Financial stability always does not remain the same. Stability may come and go in a phase, and with this, some commitments may get deferred. If you had taken some loan previously, and due to a financial crunch situation you could not pay it back, or pay it back on time, then your commitment to pay timely breaks, which again affects your credit history and score. And financial crunches may come for many reasons like a job loss, accident or disease, a sudden big expense for education fees or marriage, etc., unplanned expenses, loss in business, divorce or lawsuit, and many such things.
Man is not always prepared for sudden financial crunches, and any small or big debt you are into during such a phase becomes a bad debt. This, in turn, lowers your credit rating. But being given a chance in the right situation, you possibly would never break a commitment or payment, and always pay on time. And many companies who process bad credit loans do understand this vital thing. That’s why they give you such loans on special terms.
There are both bad credit loans and no credit check credit cards available. While processing these loans or cards, the credit score of the applicant is not checked, and neither is considered. The only considerations made are for the residence proof, the ability to pay back by scrutinizing earnings, and the citizenship proof. When these details are furnished, and the criteria are fulfilled, you can get a loan or a credit card anything in spite of your bad credit situation.
The higher interest rate of a no credit check loan or credit card
There are advantages and disadvantages both if availing of a no credit check loan or credit card. No credit check loans are available in many sectors. You may avail one for getting car insurance, buying an automobile, or a personal loan too.No credit check credit cards are issued by some lenders who checks mainly your ability to pay back by checking your fixed income.
But the only clause in this is that they charge a high rate of interest, which is much higher than the usual rate of interest in the market. That is why many people step back from taking such a loan where they will have to pay a huge while paying back.
Making great use of a bad credit loan or credit card
You can make great use of the opportunity you get by availing of a bad credit loan even at a high rate of interest. Here is a simple method that will tell you how to raise your credit score. Credit scores get raised automatically when you are seen to pay back the debt on time. Timely paying back, and paying back the right amount can help raise your credit score fast. Also, the actions get registered and recorded in your credit history. Hence, as you pay the EMIs of the bad credit loan or credit card debt on time month by month, your credit score will automatically get healthier month by month. This happens in a few weeks to months depending on the frequency of paying back.
Although you end up paying much higher compared to a loan which comes at the usual average interest rate, this helps you get your credit score back to a healthy state. You may also apply for a no credit check credit card, and start using it for small amounts, and pay those back on time. This will also get recorded in the credit history, and so on a healthy credit score will reflect how the activities helped revive things.
Finally – Find an agency to retrieve your credit score
You need to know also if any improvement is reflected in your credit score. For this, you need to find an agent who would tell you your score for free. You may have to fulfill a few conditions to know the score, and you should attempt this before applying for another major loan in life later.