If you are seeking a low-interest personal loan with a credit score of 550 in Australia, then you are likely to succeed. At one point in life or the other, everyone needs to borrow money to cover unexpected expenses or to undergo a huge financial transaction. Getting a personal loan at a credit score of 550 is certainly a possibility. A lot of Australians manage to get a personal loan from online lenders.
The secretive magical number on your credit report is the most essential factor for getting a personal loan. However, if you don’t have any credit history, or even worse if you have a bad one, then the odds may be against you. So if you are struggling to find a lender and are interested in getting a loan at credit score 550, then this guide is for you.
Credit score – credit risk profile:
A credit score is basically an indicator of your wealth and it is issued in a range of 300 to 900 with a higher number indicating better grade. A lower score depicts that someone is more likely to default and a higher score means that the person is least likely to default. This credit score helps the lender to determine which type of loan they should offer to the person.
How to get a personal loan at a credit score 550?
The first and foremost thing to do is to check your credit score so that you can have a better idea of your eligibility. Secondly, you need to gather all your major documents which serve as proof of your identity and also a personal loan application. Other details like current income and liabilities are also needed. Start contacting the lender and fill out all the required forms.
If you are looking for a personal loan at a credit score 550, you should narrow down your lenders and then get in touch with suitable lenders to find out all the available options. The key is to consider a variety of lenders which includes online, marketplace lenders, credit unions and banks. With an average credit score, you can also apply for other personal loan categories like:
- Unsecured personal loan
- Peer to peer personal loan
- Car loans
Australian lending center:
There are multiple credit reporting agencies in Australia which use a different system to compute credit score. A credit score of 550 is considered as an average score for Equifax system. It means that you have a 1 in 12 chance of having a default lodge in the next 12 months. The range of personal loan APR is 5% to 36% which is considered as a legal limit in multiple states.
Australian lending centers are offering loans to people who are struggling to find the best financial solutions. When the bank refuses and you are urgently in a need of a personal loan, you can inquire with the lending center. They are specialized in helping people with equally appealing solutions.
The lending centers need to access your information and proffer suitable options that cater to your personal and financial situation. If you clear all your payments on time, then it will further aid you to improve your credit history.
Ways to get a personal loan at credit score 550:
A low credit score may hinder your abilities to access the personal loan. While you are on the look-out for a loan, you will come across tempting adverts that are screaming about low credit loans, yet you should watch out for scammers and not fall prey to any trickery. Following are different options that you can avail to get a personal loan:
1. Go for a co-signer:
Co-signing means you can take out a loan with the help of another person. This is an amazing opportunity if your reasoning behind a personal loan is strong. If the other person possesses a better credit history, then it will be favorable for you. You can find a friend or any family member in order to co-sign your loan request. A co-signer with an excellent credit history will help you to qualify for a loan with a low APR. This will surely make your loan easier to repay.
2. Start finding online lenders:
You can also have the option of getting a loan online from an online lender. Few banks are offering competitive loans for people with an average credit score. Direct online lenders basically offer an application process so that you can easily borrow money. These lenders are willing to work with potential borrowers who have a credit score of less than 600.
With a credit score of 550, you might be able to get your hands on favorable conditions and less restrictive standards. Thus, the most important thing is to find a reputable online lender. The most reputable online lenders are Avant, Best Egg, and Earnest.
3. Peer to peer lending:
This is one of the amazing forms of borrowing money. There are numerous peer to peer online platforms where you can easily get a loan. This situation basically relates to risk versus reward. Somehow, these lenders are lenient because they have to compete with traditional lending options. There is a risk for both parties. The most well-known peer to peer lending websites are Prosper Market Place, SoFi, and Perform.
4. Use of home equity:
You can use the value of your fixed assets (like home or car) to secure a loan. This may lessen some of the lender’s risk. If you are willing to put yourself at risk, then this can be a great option. Home equity is one of the major categories of secured loans and provides you with the best possibilities to get a personal loan even if you don’t have a favorable credit score.
A broker will help you to get in contact with a lender. Then you can choose the loan type that you are searching for. There are many other connection services which are more automated than brokers. They can provide you flexible payment options with an average credit score.
5. Credit unions:
You can also apply for a personal loan through credit unions in Australia. They are considered as traditional lenders and offer more flexible lending criteria than banks.
Building a good credit score for a favorable loan takes a lot of time. If your credit score is low and yet you require a loan right away, then the above-mentioned options can be a life-saver for you. You need to be very cautious while comparing the rates and terms to find the most affordable lender. So, what are you waiting for? Fill out the application and get the best personal loan at a credit score 550 in Australia.