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Credit Score is amongst the primary thing that the bank or lender consider. Lenders measure your ability to repay finance by checking your credit score. This score sums up your credit history, the amount of credit you’ve taken, your repayment behavior, and the like. Since PL is an unsecured loan, a consumer finance provider will determine if offering you credit would be a risky proposition or not.
While you may have heard that people with bad credit can’t opt for consumer finance, this is not entirely true. Here are some important tips that you should follow to avail PL irrespective of a poor credit score.
The bank and financial institutions check your creditworthiness through your credit score. A credit score is an aggregate depending on your repayments or loans that you’ve done. It considers the credit or loan you’ve taken and how consistent you’ve been on your payment. The credit score is one of the most important parameters that are utilized to determine the approval of personal finance.
Well, the reason why a credit score is important is that it determines major attributes of PL such as finance amount, repayment tenure, personal loan interest rate, etc.
Your credit score is an indicator of your financial habits, it keeps on changing based on how you handle your credit cards and loans. There are some factors that can significantly hurt your credit score and they are as follows:
When you have a bad credit rating, it might be challenging for you to opt for a personal loan in UAE. However, it is not impossible. Here are some tips that you should follow to avail PL despite having a low credit rating:
If you have an additional source of income or you have a steady source of income, a lender may be willing to offer you consumer finance despite having a bad credit rating. However, you may have to pay a high personal loan interest rate when you prove your eligibility for PL in this manner.
Asking for a higher finance amount with a bad credit rating shows that you are more risky to the PL provider. As per the lender’s point of view, these are basically the indicators that you may have missed on repaying your credit card or loan amount. Thus, they might hesitate in offering you a higher loan amount. But if you apply for a lower finance amount, bank or lender may feel more comfortable offering the PL to you, as the lower amount can be paid easily.
There is a possibility that your credit report might have a few errors. This happens when the latest information has not been updated timely in your record. Such mistakes can take a hit on your credit rating for no fault of yours. That is why, it is quite important to keep an eye on your credit report and correct the mistakes whatever you find. This will help you to maintain a good credit score and increases your chances to avail personal loan in UAE.
If you have a poor credit rating, you can still opt for a Personal Loan by involving a guarantor or a co-applicant. Well, it is quite obvious that you will need to ask the other applicant since they will require to finish KYC formalities as well as provide his/her signatures too. The benefit here for you is that if the lender finds the guarantor or co-applicant a responsible borrower with a steady source of income and good credit rating, they are more likely to offer you a loan to you.
Though you can apply for a personal loan in UAE despite having a bad credit rating. But keep in mind that lender might hesitate in offering you a high loan amount or they might sanction PL at the high personal loan interest rate. That is why it is important to maintain a good credit score to avail PL at a competitive interest rate and low processing fee. This will ultimately help you in repaying the loan with ease.