How Does A Low Credit Score Affect Your Ability To Borrow Money?

Everyone knows that having a low credit score is not good, right? But not everyone understands how to get a bad credit score, how it’s calculated, and how to fix it. Fortunately, Cash Relief has the answers you need, and a lifeline for when you need bad credit loans in NZ

What Is A Credit Score?

When you try to apply for credit – whether it’s in the form of a personal loan, a mortgage, or for a new car, the lending facility you approach will perform a credit check. They do this to determine whether you are a low- or high-risk investment. What does that mean? Getting a loan from a lending institution or a bank requires them to invest in you. They have to trust that you can repay the loan, and your credit score is a good representation of that. Your credit score is a good depiction of how you manage your finances and debts. If you manage your money well and repay debts on time, then you will have a good credit score. If not, your score gets lower with every payment you default on. 

How Is Your Credit Score Calculated?

Your credit score is determined by varying factors that affect your credit report. In fact, your score is a condensed, but accurate representation of your financial history. It includes your account information and payment histories. It even shows previous enquiries made by other credit providers who have viewed your credit record in the past. The credit score to your name summarises this information and displays a representation of whether you would be able to repay a loan, or not. 

How Does A Low Credit Score Affect My Ability To Borrow?

Unfortunately, banking institutions are very strict about whom they give credit to. They rely solely on what your credit history says about your ability to manage money. If your credit score is low because you’re in the habit of defaulting on debt repayments, it shows that you are a high-risk investment. A bank would not be comfortable with investing money in someone who has had trouble paying off debts in the past. And unfortunately, banks cannot afford to be strict with some, and lenient with others. Regardless of why you need a loan, or why you have bad credit, a traditional banking institution will not relent and provide financing, because low credit scores are too high of a risk. In short, a low credit score does affect your ability to borrow money, and it does narrow your options. But not all is lost – you can still apply for bad credit loans in NZ from private lenders like Cash Relief. 

Do I Qualify For Bad Credit Loans? 

With a low credit score, even though your options are limited at a bank, it doesn’t necessarily mean that you won’t qualify if you approach a private lender. Private lending facilities in New Zealand don’t have to adhere to the same regulations that banks do, so they can set their own policies, repayment schedules, amounts you can borrow, and interest rates. 

They can also set their own requirements, which, thankfully, are less strict than most banks are. At private lending facilities, among the documentation you need to apply, what matters most is that you have employment and that you earn enough to cover the loan repayments. Therefore, qualifying for a fast cash loan, or a payday loan, is very possible. 

And if you have bad credit, you can apply for bad credit loans in NZ, which are provided to people like you who have lower-than-average credit scores due to financial difficulties they’ve had in the past. A bad credit loan will have its own requirements, loan amounts and interest rates. The values you borrow might be small, and the loans might be short-term, but they can provide financial assistance when you need it most. The interest rates might also be higher than average, but as long as you can repay the loan, you’ll get approval. 

How Can Cash Relief Help You?

Cash Relief is a private lending facility in New Zealand that you can trust. We provide small, short-term loans of up to $600, for whatever you need. Our bad credit loans are especially helpful, particularly for those who have bad credit and need financial assistance in an emergency. 

Having bad credit isn’t a death sentence, and you won’t be in this situation forever. However, it can be challenging to find financing if you have bad credit. Fortunately, Cash Relief has a lifeline for you! Contact us today for any information you need about our bad credit loans in NZ.