You have to pay rent to keep a roof over your head, pay bills and stock up on food– living, in general, is expensive nowadays. Working a job that allows you to save while still paying bills and enjoying life is a privilege that not everyone can experience. Some people need a little help from online personal loan providers or in some cases, bad credit loan providers to make it through the month.

How do people end up having to apply for bad credit loans instead of a regular personal loan? Financial services like loans and credit cards depend on the credit score of an individual. The decision to approve or reject your application for either a loan or a credit card depends on your credit score.

What is a Credit Score?

A credit score gives banks and other financial service providers an idea whether you are reliable as a borrower or not. A good credit score means that you are less likely to be a risky borrower. 

How Does a Credit Score Work?

The calculation of your credit score is based on the information in your credit report. The report contains the details of your history as a borrower. Some information includes the amount that you have borrowed in the past, records of whether you paid your loan back on time, and details of any recent applications to a loan or a credit card.

There are different credit score reporting agencies and they use different credit score ranges, but generally, good credit scores or higher credit scores are favoured over lower ones. Individuals with high credit scores are known to have a reliable borrowing track record which makes them highly likely to pay their lenders. 

However, having bad credit and depending on a bad credit loan is nothing to be ashamed about. There are many reasons for ending up with a bad credit score, you can’t predict some unfortunate events in your life like medical emergencies or losing a job. If you happen to lose your job in the midst of paying back a personal loan, then it is hardly your fault that you cannot pay back the money in time. Understandably, finding new work is not an easy feat. 

Plus, you can also have a bad credit score by simply being a young working professional who does not have a financial portfolio yet. No one in their right mind will blame you for being young.

Ways to Attain a Good Credit Score and Prepare for a New Personal Loan

If you have a low credit score and you want to improve it, here are some things that you can do:

Pay Your Bills Consistently.

Sometimes, you have the means to pay, but you are forgetful. Avoid getting in trouble with your lender or bank by setting up payment reminders for your personal loan or bad credit loan repayments. Consistently paying on time will help raise your score in a few months.

 Inform Your Lender or Bank in Case of Payment Issues.

As mentioned previously, you can’t control some things in life. In the unforeseen case of an unfortunate event and you find yourself unable to pay your loan on time– let your lender or bank know right away. Immediately letting your lender know about your situation lets them know that you don’t plan on running away. They can even help you set up a different payment plan to ease the negative effects of late payments.

Prioritise Paying Your Maxed Out Cards.

If you have multiple credit cards, you should pay off the ones that are close to your credit limit. Maxed out credit cards increase your credit utilisation rate which is bad for your credit score.

Get a Bad Credit Loan.

You may be thinking that another personal loan is not going to help your credit score, but that’s where you are wrong. Apply for a bad credit loan for a small amount that you can easily pay– this will show up as a piece of positive information on your credit report. However, this should be a last resort option.


It is easier to maintain a good credit score rather than to repair it. Depending on the damage, it can take at least 3-6 months for a positive change to appear on your report and even more time to completely repair your credit score. It is difficult, but not impossible. Start improving your credit score now!

The opinions expressed in the Blog are for general informational and entertainment purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product.  It is only intended to provide education about the financial industry.  The views reflected in the commentary are subject to change at any time without notice.

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