How to Get a Personal Loan With Bad Credit? If you have a low credit score or a thin credit history, you may find it hard to get approved for a personal loan. However, there are some steps you can take to improve your chances of getting the money you need.
What is bad credit?
Bad credit is a term that lenders use to describe borrowers who have a history of missing payments, defaulting on loans, or having a high debt-to-income ratio. Your credit score is a numerical representation of your creditworthiness, based on your credit history. The most common credit scoring system in Malaysia is the CCRIS score, which ranges from 0 to 18, with lower scores indicating higher risk.
Generally, a CCRIS score of 0 to 2 is considered good, 3 to 4 is fair, 5 to 6 is poor, and 7 to 18 is very poor. If you have a CCRIS score of 5 or higher, you may have difficulty getting a personal loan from conventional lenders, such as banks and financial institutions.
How to get a personal loan with bad credit
If you have bad credit, you may still be able to get a personal loan, but you may have to pay higher interest rates, fees, and charges, or provide collateral or a guarantor. Here are some tips to help you get a personal loan with bad credit:
- Check your credit report and score. You can get a free copy of your credit report from Bank Negara Malaysia’s eCCRIS portal or credit reporting agencies such as CTOS and RAMCI. Review your credit report for any errors or discrepancies, and dispute them if necessary. You can also check your credit score from these agencies, usually for a fee. Knowing your credit score can help you understand your chances of getting approved for a personal loan, and what interest rates you can expect.
- Compare multiple lenders and loan options. Different lenders have different criteria and rates for personal loans, so it pays to shop around and compare. You can use online platforms such as RinggitPlus1 to compare and apply for personal loans from various lenders in Malaysia. You can also use a personal loan calculator to estimate your monthly repayments and total cost of borrowing.
- Consider alternative lenders and loan types. If you can’t get a personal loan from conventional lenders, you may want to look for alternative options, such as peer-to-peer lending platforms, microfinance institutions, or cooperative banks. These lenders may have more flexible requirements and lower interest rates than traditional lenders, but they may also have lower loan amounts and shorter repayment terms. You may also want to consider other types of loans, such as secured loans, which require you to pledge an asset as collateral, or joint loans, which require you to have a co-borrower or guarantor with good credit.
- Improve your credit score and financial situation. The best way to get a personal loan with bad credit is to improve your credit score and financial situation. You can do this by paying your bills on time, reducing your debt, increasing your income, and saving more money. By doing these things, you can show lenders that you are responsible and capable of repaying your loan, and you can also qualify for better interest rates and terms in the future.
Conclusion
Getting a personal loan with bad credit is not impossible, but it may require some extra effort and cost. By following the tips above, you can increase your chances of getting the money you need, and also improve your financial health in the long run. Remember to always borrow responsibly, and only take out a loan that you can afford to repay.
Source: 2/15/2024
(1) Best Personal Loans in Malaysia 2024 – Compare and Apply Online. https://ringgitplus.com/en/personal-loan/.
(2) How to Get a Personal Loan With Bad Credit – NerdWallet. https://www.nerdwallet.com/article/loans/personal-loans/get-personal-loan-bad-credit.
(3) How To Get A Personal Loan With Bad Credit | Bankrate. https://www.bankrate.com/loans/personal-loans/how-to-get-a-bad-credit-loan/.