Nowadays, it is easy for people to fall behind on payments, be it their credit card bill or utility bills. This can lead to a bad credit rating. That’s why, when the time comes that they need money, they tend to have a hard time looking for loans because of their bad credit rating or history. You may not be fully aware that you have a bad credit, but lenders are. Considering the increasing number of people with a poor credit score, it can be worrying and a lot of people assume they will never be able to lend the money they need to start their business.
How did I get a bad credit rating?
You will probably hear this from people a lot. Most are not aware of the ‘bad’ behaviours they are unintentionally doing. These bad behaviours, in turn, affect their credit rating. This doesn’t necessarily mean having a bad attitude, but rather, bad repayment traits. Paying late, not following the terms and conditions given by the lender, and not paying at all are just some of the bad behaviours a person might make. Of course, there are things that can’t be controlled, like a change in your source of income. If this happens, you must inform the company or the lender about it. Reporting such events may lessen the risk of getting a bad credit rating.
Some factors that also affect the credit rating are being declared bankrupt and paying just the minimum amount on your credit card each month. There sure are a lot of reasons why a person gets a bad credit rating. Maybe by now, you realise that you’ve done those things and you think that you won’t be able to borrow money anymore, but that isn’t true. There are startup business loans available for many different people, and sometimes other circumstances will be considered. Your ability to repay the loan is usually the main consideration, for example. This does not mean a loan is guaranteed, but it does mean that there are options for you.
One of the great things about the diverse set of lenders available today is that your application wouldn’t be declined outright because of a bad credit rating. There are a lot of lenders offering loans for bad credit if you can prove you can repay. But, how do you choose the right one? In this part of the post, you’ll find out how to pick the lender that will be able to help you and not put you in any more trouble
Steps on how to choose the best lender for your startup venture
1. Decide how much you need to borrow. Before anything else, you must first assess yourself. “How much do I really need to borrow?” Since you have a bad credit rating, you may have a harder time if you want to borrow a huge amount of money. If you need to borrow £1000 to cover an important purchase, just borrow £1000—not £5000.
2. Don’t settle for the first lending company that accepts you. Yes, it may be hard to find a company who’ll loan you the money if you have a bad credit rating, but when you find one, you can’t just give in. The reason why you should look for more than one company is to find out which one will give you a better loan offer. There may be a lot of lenders offering cheap loans but you want to make sure you’re going to get the best deal, right?
3. Compare prices. Once you’ve gotten in touch with some lending companies, it’s now time to compare the prices that they offer. Just like a regular payday loan, the main basis for the cost of the loan is the interest rate. The process is pretty much the same. The interest rate will still be according to the APR or Annual Percentage Rate. However, since you have a bad credit history, lenders may charge bigger interest rates. As stated earlier, it’s important to look for two or more lending companies so that when you find out the fees they are going to charge you, you can choose which one offers the best and cheapest deal.
Having bad credit shouldn’t restrict you from borrowing money, especially when you need it the most. There are a number of lenders offering solutions; you just need to follow these steps to have an easier time borrowing money. And also, remember to avoid the bad behaviours mentioned to prevent getting a bad credit rating.