BAD CREDIT LOANS IN PAARL
If you are from Paarl and would like to know more about credit scores and how that impacts your bad credit and chances on getting financial assistance then this article is for you.
Bad credit has a stigma attached to it. Many people who have bad credit are misinformed and thus are not able to improve their lives. “South Africans are entitled to a free copy of their credit record every year. Many South Africans are surprisingly unaware of the importance of a good credit profile, many do not know what a credit profile even is, and even if they do, they seldom check their own personal credit profile,” says Mellony Ramalho, Group Executive African Bank. “Today many potential employers look at credit profile reports as a way to judge a person’s character and level of responsibility.” Your credit score is typically a number from 0 to 999, and is calculated by using all the details on your credit profile. “It reflects a ‘score’ summary of all your financial decisions, and is often used by lenders, such as home loan and personal loan companies, to make accurate decisions on whether they should lend to you or not,” says Michael Bowren, CEO and founder Fincheck.
Overall, a credit score measures the amount of potential risk the consumer is to the creditor. We take a look at what the experts have to say about credit scores, and what should and shouldn’t be done: The higher your score, the better your credit health will be, which will be an advantage when applying for a home loan, making it easier for you to borrow money at lower interest rates. “The lower the score, the higher the risk which then influences the outcome of the credit application” says Andile Fulane, CEO, Seed of Prosperity. By managing your credit profile effectively, you can ensure your image and profile is viewed favorably by lenders or other organizations. A bad credit score would mean the exact opposite of this, and result in almost no financial institution willing to offer you a home loan.
Credit score guideline:
Credit score range Description Risk Band
767 to 999 (Excellent) Consumer has a high probability of collection. Low risk
681 to 766 (Good) Consumer has an average probability of collection. Medium risk
614 to 680 (Favorable) Consumer has a low probability of collection.Potential High risk
583 to 613 (Average) Consumer has a low probability of collection. High risk
527 to 582 (Below Average) Consumer has a low probability of collection. High risk
487 to 526 (Unfavorable) Consumer has a low probability of collection. High risk
0 to 486 (Poor) Consumer has a low probability of collection. High risk
Your credit score is calculated by a credit bureau based on your credit report. They consider how you pay your bills, how much debt you have and, more importantly, how all of that compares to other credit active consumers. Each bureau has a different way of calculating your score, and take into account different forms of information, including information their organization already holds on you, or your employment circumstances. Your credit score is only one part of your credit report, although it is almost the single most important item on your credit report, the full report gives you some handy information.
Your credit report is a combined summary of your financial background with an overview of your credit score, financial accounts, profile, and rating. As you start transacting with various banks, retailers and other financial institutions like lenders, you start building a financial history. As you start transacting with various banks, retailers and other financial institutions like lenders, you start building a financial history. Your credit history will be determined by the amount of money you have borrowed in your life and how much of it you have diligently paid back on time.
Good Credit Scores Aren’t the Be All And End All
We are continuously warned, first by our parents and later on in our lives by our common knowledge to keep a good credit score. Threatened by the thought of not one day being able to buy ourselves that car or home of our dreams. Yet, falling into that category of those with bad credit scores happens more often than not. With constant expenses and inflation out on a rise our money goes faster than it comes, so it seems somewhat inevitable that it would happen to the best of us.
Compscan, says that at least 50% of South African Citizens have a high or very high risk score – credit scores of 621 and lower. For an area like Paarl this possess as problematic. In an ever expanding town with new developments being taken on daily and the price of education skyrocketing, how is the community able to keep up with their payments? For many taking out a loan is the only way to meet these demands. Although there are only few registered credit providers which specialize in bad credit loans in South Africa it is not impossible to come across them.
There some options for taking out a loan with bad credit scores and we no longer find ourselves tied by our location, as it was in previous years. The need for physical meetings is no longer required. With online applications it is just as easy for someone in Paarl to take out a loan as it is for someone in the city. It goes without saying that the application process is more difficult for someone who has a bad credit score, but it is not impossible. Provided of course, that you have the correct documentation.
First and foremost you will need to be a South African Citizen with a smart ID card or a green bar-coded ID. Secondly will have to be 18 years or older – many loans require that you at least be 21. Finally your monthly income should exceed R3000.00. Some places are more lenient than others however and you should therefore also be able to provide a copy of your ID, proof of address, and a recent pay slip.
Bad credit loans are divided into two types of loans, secured and unsecured. A secured loan is usually tied to something valuable like a vehicle or property. Should you not repay your loan as stated, the lender may then repossess that asset. Unsecured loans on the other hand are loans like; student loans, credit cards and personal loans. They are not protected by anything of value. Should you then be unable to repay your loan as agreed, the lender has nothing to repossess.
Always be cautious when taking out a loan though. Perhaps I am only paranoid as a result of reading too many stories but here are a couple of things to be mindful of. When taking out a loan be sure that they are registered with the NCR (National Credit Regulator). Take the interest rate as well as the additional fees that the lenders may charge into consideration and always compare. Don’t simply jump at the first loan that looks appealing.
Providing for yourself and your family is not impossible when given a bad credit score. Whether it is to buy a new house or pay your children’s tuition there are institutions which can provide assistance like African Bank and Bayport Financial Services as well as online options like Mr. Cash Loans.