Bad credit is often a term assigned to you in case you have defaulted on your loan in the past. Typically, these involve loans that haven’t been paid for more than 60 days. These could also include defaults that have been paid off, part IX debt agreement, present bankruptcy, or past bankruptcy. Of course, acquiring bad credit can make it difficult to get a loan in NZ if you ever need one.
Remember that every time you apply for a loan or any credit product, a credit inquiry is recorded on your profile for up to a term of five years, regardless if you’re rejected or accepted. If banks look into your profile and see a large number of credit inquiries with many of them being declined, it may further harm your chances for getting approved for a loan. In fact, even some successful applications, if done too frequently, could paint a bad outlook on your credit history.
Fortunately, having a bad credit history is no longer the end of your financial goal. There are ways for you to acquire even a bad credit loan, or even fix your record over time. For instance, you can still apply for an unsecured loan if your bad credit is limited to:
Only one default to any finance company or bank, which have already been paid off
Two small unpaid defaults to other companies
On the other hand, you can also try going for secured personal loans. Under a secured loan arrangement, you need to register a physical asset as a security guarantee for the loan. You can try for a secured if:
These can be good attempts to try out in case you need help with financing your next venture or purchase.
Sort out which factors affect your score the most. Maybe it’s your short account history? Or perhaps your credit utilization rate, which is based on how much credit you have available and how much you are using? Regardless of the factors, sorting out your credit score starts with identifying the biggest contributors to your score.
Pay your bills on time. Your payment history can be the largest contributor to your credit score, so it only makes sense that not missing any payments is one of the best ways to improve your credit score. You can set up an automatic payment system for recurring bills, so you don’t have to worry about keeping track of your multiple deadlines
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Try ensuring that your credit utilization rate remains around 30% of your limit at any point. Pay down your debts gradually before trying to accrue new ones. You can try the snowball method which starts with paying off the highest interest cards first, to make repayments easier over time.
While improving your score, you may want to avoid applying for new credit or loans in case a hard inquiry happens. Hard inquiries are when a lender checks your credit in order to evaluate your eligibility for a financial product.
Lastly, you can try building up your credit history with the help of other people. You can try these effective strategies in order to build up credit:
A bad credit score no longer means the end of your financial goals. You can always take action to improve your credit score and implement best practices to keep a good rating going forward. And while you’re working on improving your score, you will still find that some providers are willing to lend a helping hand. Use our FREE comparison tool here at glimp in order to find lenders providing the best bad credit loans here in NZ!
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