Every responsible lender is obligated to run an affordability check, which involves a credit score perusal. A decent credit report is vitally important to obtain a loan at affordable interest rates as it is an acknowledgement of your past payment comportment. A subprime credit rating indicates that you struggled to keep up with payments in the past and will so now. As it increases the risk of default, a lender will either turn you down or, if not, charge high interest rates.
A poor credit file is never appreciated by any lender, whether or not you are borrowing a small amount of money. However, it does not insinuate that you are not eligible to apply for a loan. Your less-than-perfect credit score cannot preclude you from applying for a loan. It depends on the lender whether they will be able to lend money or not. If you are borrowing a large amount of money, you will most likely be refused, but if you need money to meet urgent expenses, you can be approved. However, it is worth bearing in mind that you will be charged high interest rates.
Ways to get an urgent loan in Ireland despite a bad credit rating
Do you have a bad credit rating? Of course, this is not a good sign for you. This will attract high interest rates and restrict the borrowing amount, but most lenders do not hesitate to approve applications for urgent loans despite a bad credit rating. If your credit rating is poor and you need money for a minor emergency, you can improve your chances of getting a loan approved with the following reasons:
You should have a strong repaying capacity
First off, you should have a strong repayment capacity. Urgent loans in Ireland are for a small amount of money. Usually, they are not more than €1,000. This is the maximum limit that a lender could lend you, but a majority of lenders do not lend more than €700, and that is because these loans are repaid in full on the due date.
The repayment term of these loans does not exist more than a month. You will be required to discharge the whole debt in one fell swoop. It could be challenging to settle the debt without struggling with other essential expenses, and therefore, lenders restrict the loan amount.
Your credit score is already worse, which means high interest rates will be levied. Therefore, lenders will emphasise your income. You should have a great income source. With a great income, you would be able to offset the impact of your poor credit rating.
These loans are paid down in a lump sum, and therefore, a lender would most likely accept applications for these loans from those who have great income sources.
Borrow less money
Experts suggest that you should borrow less than you actually need. The smaller the loan amount, the better it is. This is because lenders will be less sceptical about your repayment capacity. If they find that you will not be able to repay the debt on time, you will undoubtedly be rejected.
While a lender will check your repayment capacity before signing off on your application, it is your responsibility to check your repayment capacity. If you find that you cannot settle the debt on time, you should never borrow money. Try to check your budget and see if it has wiggle room to pay off the debt. Do not borrow more than you can afford to pay back, because otherwise, there is a chance that your application will get rejected. This will damage your credit score because hard inquiries will continue to show up on your credit file.
If a lender approves a loan with a high amount, you will end up rolling over the debt. This will quickly accumulate the total size of the debt. Eventually, you will end up falling into an abyss of debt.
Reduce your debt-to-income ratio
Another thing to do to improve your chances of increasing the approval rate is to reduce the debt-to-income ratio. A debt-to-income ratio suggests the amount of debt you owe against your income. This ratio will not affect your credit score, but in spite of that, a lender would check this ratio.
If you owe money at the time of taking out an urgent loan, your chances of getting approval for a loan are very slim. Of course, your lender will be sceptical about your repayment capacity. They will likely assume that you will not be able to repay the debt along with others. Ideally, you should not owe any amount of debt at the time of taking out an urgent loan.
Apply to a lender who runs soft inquiries
Since your credit history is already abysmal, it is suggested that you borrow money from a lender who runs soft credit inquiries. They do not show up on your credit report, and hence, there is no risk of losing your credit points. If a lender runs hard inquiries, they will be recorded on your credit file.
They remain there for two years, which means you will have to face the consequences of those queries for two years. You can avoid this impact by borrowing money from lenders who run soft inquiries.
Some lenders call these loans urgent loans in Ireland with no credit check. Before applying for these loans, you must ask your lender whether they run soft inquiries. Some lenders run neither hard nor soft inquiries. You should always beware of such lenders because they could be loan sharks.
A registered lender is obligated to run a soft credit check, if not a hard credit check, to determine your repayment capacity. There are high chances of being trapped in debt if you borrow money from loan sharks.
The final statement
You can get urgent loans in Ireland despite a bad credit rating if you have a stable income source, have a low debt-to-income ratio, and apply for these loans from a lender that runs soft inquiries instead of hard inquiries.