What is Credit Score?
A credit score is a method used by credit companies in measuring and verifying the creditworthiness of a borrower. A certain range of numbers has been used to classify an individual’s credit standing ranging from 300 to 850.
Below are numerical ratings used which signify the creditworthiness of a borrower.
- Excellent: 800 to 850
- Very Good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor/Bad: 300 to 579
A person with a bad credit history means that he or she has a credit score between 300 to 579 and anyone with this credit rating will not be able to be granted a loan from different financial institutions that require a credit check.
What Affects the Credit Score?
There are criteria that credit companies follow to ascertain the creditworthiness of a borrower and they are the following:
- The payment history will be checked if the person has been able to pay all loans or credit acquired in a timely manner.
- The amount borrowed will also be checked such as how much of a person’s credit line has been used. For example, if a person has a credit card and exceeds the limit, that will go against the credit score of a person.
- When a person has had a long history of obtaining credit and has been paying on time, this will tremendously improve the credit score of a person. The length of credit history is also important in the determination.
- A person with a lot of credit applications will not be advantageous as this will show a red flag and credit companies might assume that a person is financially unstable and has difficulty paying debts on time.
In the Philippines, there are different companies that provide a credit scoring system. They are the following:
Credit Companies that Offer Cash Loans for Bad Credits
Despite the fact that many financial institutions require borrowers to have a good credit score, there are still other lenders that offer cash loans to people who have bad credit histories.
Listed below are the common requirements in applying for a cash loan:
- The borrower must at least be 18 years old but not more than 65 years old at the loan’s maturity
- Submit 1 government-issued ID
- Submit proof of income
- Provide a bank account number
- The borrower must have an active mobile number
Following are a few lenders in the Philippines that offer cash loans to borrowers even with a bad credit history:
- Loan Amount: Up to Php15,000
- Loan Interest: as low as 9.5%
- Loan Terms: 15 – 61 days
- Loan Amount: Php5,000 to Php50,000
- Loan Interest: 0.8% to 3.5%
- Approval Period: 1 day
- Loan Amount: depends on the appraisal value of the collateral
- Interest Rate: 13% for a loan term of 3 months
- Loan Term: 3 months, extendable
Obtaining financing with a bad credit history is a challenge especially if one approaches banks and other traditional financial institutions. It is always wise for a person to ensure that any credit or loan payments that a person has must be paid on time. If not, the consequences are not ideal, especially in times when a person has a financial emergency. Nevertheless, there are still other financial institutions in the country that offer cash loans even with a bad credit history, although the interest rates are higher, the terms are shorter and in some cases, collateral is needed.