3 Hacks to Bad Credit Loans

Posted on January 12, 2018 | By Manager 3 hacks to bad credit loans

Your credit score is kind of like oxygen, you only feel its importance when you need money. But it’s not sufficient to get you a feasible loan!

As much as I hate to acknowledge it, our credit score basically dictates what we can and can’t do in life.

For example, that new house you want to buy? You probably cannot do so unless you have a credit good enough to get you a low-interest loan. Or that once-in-a-lifetime trip to visit your grandparents? You can’t fund it without a loan either.

Every small delay you make in paying your utility bills or every time you max out your credit card limit, you are leaving a dent on your credit record. And every time you apply for a loan, you are pulling your score down. On the bright side, the dents are not permanent.

If you stay punctual in making your scheduled payments and maintain discipline in shopping, your credit records and score will eventually improve. However, fixing a bad credit record takes years of time and sometimes, we don’t have that much of time in our hands.

Sometimes, a difference of 30-40 in credit score becomes the obstacle in your path of getting a payable loan. For example, the bank might provide a loan at 10% interest rate if your credit score is 650, but since you have 615, you will get a loan at a rate of 20%. That 10% might be too much to pay because of your limited income.

If you are in a similar situation, let me tell you that you are NOT doomed.

There are a few hacks which you can use to boost your credit score a bit. Even though you’ll not be able to push it up by hundreds of points (which can only be done after years of trying) you WILL be able to increase it to a point at which you can get that good loan.

To see the effects of these hacks, you will still have to wait a few months. No hack can increase your score within days. More importantly, the change will not be permanent as you have to make sure you are maintaining it.

Nonetheless, it is still better than waiting years to see an actual change in your credit score.

Tricks to improve your bad credit quickly:

Ask for an increase in credit limit

One of the main things that affect your credit score is your credit cards.

As you know, credit cards come with a limit up to which you can spend without having to pay back right away. If you ask for an increase in your credit card limit, it basically means you can spend more money on credit.

However, this does not mean you should ACTUALLY spend the extra limit. If you can show the bank you spent Ksh.300,000 out of your Ksh.500,000, it means you are not a spendthrift or a risky customer for them.

On the other hand, if you spend all Ksh.300,000 of a Ksh.300,000 limit, it signifies that you kept spending till your card was maxed out, which is a big no-no for banks.

Consolidate your loans

If you have multiple credit cards, it means you have to pay multiple bills too. All these bills include their own interests and that means you have to pay a lot more than what you took!

Instead of doing that, you should take one personal loan with which you pay off all your credit card debt. This greatly decreases the amount of interest you have to pay as you will only pay the interest on your personal loan, while also improving your credit card status on your credit report.

Moreover, a personal loan is non-revolving debt, which will also improve your credit score as after some time it won’t exist anymore.

Try “debt-snowball”

This is not a hack in technical terms, but it’s definitely a good practice which motivates you to clear your debts on time.

Basically, make a list of all your debts, in an order of smallest to biggest. While you keep paying the usual installments, use any extra money you get to clear a loan. Since you will be starting with the smallest one first, it will get cleared easily. Then cut it off your list.

As you keep cutting off debts, you will be so motivated to pay off your loans that you won’t have any left soon! If you try these hacks, you should see a change in your credit score within a few months. Hope this works out for you!