Loans with bad credit

How to get a loan with a bad credit history in the Philippines?

To get a loan in the Philippines or anywhere else globally, one of the first things financial institutions look at is your credit history. How do you borrow money when you don’t have a credit record or a bad one?

Note that fixing a bad financial history or building one from scratch is not easy. While your choices are limited, some financial institutions will still take the risk and lend you money even with a bad history. However, this comes with a twist.

You can lend money even with a bad history in the Philippines, but you may pay more interest or have a shorter repayment period. Whichever the case may be, applying for a loan with a good financial standing comes with several perks. But if you do not have a good record, here’s everything you need to know about getting a loan with bad credit in the Philippines.

What is a bad credit history?

Credit history is a number that represents your ability to pay off a debt or your creditworthiness. It is a financial report often consisting of a three-digit number and falls between 300 and 850 in the Philippines, with 850 being the highest. Having a credit score below 300 means you have a bad history, and it says a lot about your financial situation and how well you’ve managed your debts.

Many people believe that a bad history only affects their ability to borrow money, but it goes beyond that. Bad financial history can also affect your ability to get a good insurance rate in employment matters.

Suppose you do not know your financial history rating and would like to get a copy of it. In that case, you can easily do so in the Philippines through any CIC accredited credit bureaus such as CIBI Information, Compuscan Philippines, CRIF Philippines, and TransUnion Philippines. 

How can I apply for a loan with bad credit?

Most people think borrowing money with a bad financial history is hard, but they are easier than we think. There are several ways you can borrow money with bad history these days. Here are five ways to lend money despite your bad history:

●  Non-banking financial companies (NBFCs)

A non-banking financial company or NBFC is a financial institution that does not have a full banking license. With an NBFC, you can borrow money from them despite your low credit score. However, borrowing money from NBFC generally comes with a slightly higher interest rate. But the good thing about NBFC is that they are more flexible than banks.

●  Online lending

Online loans for bad credit history are common, with very few lenders requiring collateral or checking your scores. This is ideal for those who need urgent cash as applications are made via a PC or smartphone.

●  Credit union

Another great option you have to consider is a credit union. These institutions are smaller than corporate banks, and they have a community focus. As such, they review applications to borrow money more personally. In other words, applications to lend money are discussed with you aside from merely looking at your score and other numbers on the application.

●  Credit card

When looking for a loan guaranteed approval Philippines, you can consider getting a credit card. And yes, it is possible to get a credit card even with a bad financial score. Borrowing money this way can help you build your financial score by maintaining good financial habits.

●  Family and friends

You can leverage your closeness with family and friends to acquire good payday loans. Irrespective of your financial history, family and friends are dependable when you need fast and instant cash, especially if they understand your financial situation. And the good thing about this option is that you will not pay any interest. But remember that your relationship with them is the collateral, so tread with care when it comes to repayments.

Requirements for a loan with bad credit

Requirements for a loan with bad credit Philippines vary, depending on the lender. However, there are a few considerations like income and score that financial institutions look at when reviewing applicants. So, before you start shopping for where to borrow money, if you have a bad history, here are four requirements financial institutions look at when evaluating a quick loans application.

●  Age

You might wonder what your age has to do with borrowing money? Your age has a lot to do with borrowing money in the Philippines, as you have to be at least 18 years of age to borrow money. You also must not be above the age of 60 when applying to borrow money.

●  Proof of identity and address 

Most lenders will require you to provide a valid government-issued identity. This precaution is to validate your age and reduce identity theft. In addition to confirming your identity, most lenders will also want to know you have a stable living situation. Hence, they ask you to provide proof of address, such as a recent utility bill, a copy of your lease, etc.

●  Income

Whether you are applying for online loans for bad credit or not, lenders impose that you must have a source of income. This requirement is to ensure the lender will be able to recover borrowed money. The minimum income requirement varies by lender. However, most lenders don’t disclose the minimum income requirement.

●  Debt-to-income ratio

Debt-to-income ratio or DTI is expressed in percentage, and it is a portion of your gross income that goes towards paying debts. Lenders use DTI to know how much a lender has as spare cash. Ideally, most lenders require a DTI of 36% to approve supplication to borrow money.

●  Collateral

Not all lenders require collateral. But if you are applying for a secured loan, you will be required to pledge valuable assets. Valuable assets can be anything from homes to vehicles to cash accounts to investment accounts.

How to get a loan with bad credit online?

Applying to borrow money online is the easiest way to get an instant loan with no collateral. 

1. Shop around

When looking for quick loans, you first want to compare the different lenders you have at your disposal. No two lenders are the same; their requirements or rates may vary. So it pays to know your options before applying to borrow money.

2. Register

Read the terms and conditions of the lender before you register. You will provide your name, proof of identity, and home address to register. If registration is successful, you can then proceed to the next stage.

3. Get an overdraft

After registering, you can then get an overdraft. The lender will then tell the repayment terms, amount you can borrow, and expected rate. Getting an overdraft from different lenders is advisable to know which lender is most favorable for you.

4.   Apply

When you are satisfied with everything, you can proceed to apply to borrow the money. 

What are the benefits of loans with bad credit in the Philippines?

Does borrowing money with bad credit history come with any benefit?

●  No collateral

Mostly, applying to borrow money with bad credit Philippines does not require collateral. Apart from providing something valuable, lenders don’t have to be employed. This means that lenders can have a low financial history rating, be unemployed and still have access to borrow money for medical emergencies and other financial troubles or barriers.

●  Fast approval

Personal loans for bad credit also have a faster approval time. Most lenders that allow you to borrow money with a bad financial history usually process it within a day or two, and the cash will be available to you in no time.

●  Simple registration procedure

Lenders that offer borrowers credit with bad credit Philippines have the least requirements during registration. Most lenders do not require documentation other than a valid means of ID and proof of address. Only in some cases will you be asked to provide a copy of your bank statement.

●  Issued for any purpose

You can apply for a bad credit loan for any reason, be it for debt consolidation, medical bills, gadget purchase, and other reasons. Whatever the reason you have for applying to borrow money will not affect its approval or not.

Conclusion

Once you can get approved to borrow money despite not having the strongest financial history, take the opportunity to improve your history. While applying to borrow money with bad financial history has its benefits, a good financial history comes with better benefits. So, pay your debts consistently and on time to improve your financial history rating.