Just note that we are not a financial advice but we like to share financial information to the people of South Africa. Here we will provide you with all the necessary information that you need to take up a loan, lease a car/house, you will also find more about how to increase your credit score is you have a bad credit card and how to get a personal loan if you are blacklisted.
What to expect with bad credit
If your credit score is in the low 600s or below, lenders will not fall all over themselves to attract you as a customer.
Many will reject you outright. Every lender makes its own decisions about the kinds of risks it is willing to take in extending credit. Some cater only to those with excellent credit, so even someone with a score of 695 could be rejected.
If a lender does agree to extend you credit, you’ll pay more in interest than someone who has a higher credit score. You won’t qualify for 0% interest credit cards, for example, or personal loans at single-digit interest rates. You’ll face subprime rates to finance a car or a house. You may also have to pay more for auto and home insurance, and you may be stuck paying utility deposits that people with higher credit scores get to skip.
Luckily, your credit scores are only a snapshot based on your credit report at that moment. They change, and frequently.
You can improve your credit score
Get all the advice on how you can improve your bad credit score and get finance that you need in future:
It usually takes a lot longer to turn a bad score into a good one than it does to ruin a good score, so it’s important to know where to focus your efforts.
By far the biggest factors are on-time payments and credit utilization. That means you need a track record — the longer, the better — of payments made by the due date and your credit card balances need to stay below 30% of your overall limit. You shouldn’t expect to see great improvement in your score if your bills aren’t paid on time and your balances are near your credit limits.
There are credit products designed to help build your score. They don’t have the best terms, but they can be effective. With a secured credit card, you make an initial cash deposit, which becomes your credit limit. You then use the card like a regular credit card, being careful to pay your bill on time and keep your balance low.
Other options are credit-builder loans, where the loan amount is released to you after you pay off the loan; and loans secured by a deposit (often a certificate of deposit or your credit union share deposits). With both of these, the lender isn’t taking a real risk in lending to someone with a poor track record. Make sure your lender — typically a credit union or community bank — will report your payments to the three major credit-reporting agencies.
It takes about six months of on-time payments to make a difference in your credit score.
Here are 6 things to know about unsecured home improvement loans
It’s the “paper or plastic” of home improvement loans — whether your loan should be secured or unsecured.
Unsecured loans marketed specifically for home improvement are a relatively recent option. Many of the current lenders started making these loans after the home market collapsed nearly a decade ago, leaving many homeowners with less (or negative) equity.