Credit history is information about the performance of a specific borrower of its loan obligations. It is on the basis of this information that credit institutions make a decision to issue a new loan to the borrower or to refuse. The general rule is that a candidate with a good credit history will be issued a loan at favorable interest rates without any problems. If the credit history is seriously damaged, such a borrower is likely to be refused.
If your credit history leaves much to be desired, but you still need a loan, it should be remembered that each bank has its own policy. Some banks, usually large and well-known, give loans only to candidates with a good credit history. Little-known, recently opened and small banks, in order to attract customers, often pursue more risky policies and issue loans to people with bad credit history.
As a rule, only expensive loans or loans from MFIs at high interest rates are available to borrowers with bad credit history. Most often, they can be offered to take out a secured loan, that is, secured by a car, real estate, bank deposit, etc.
Thus, if you need a small loan without collateral, you must:
- Apply for express loans. The decision on them is made in a matter of minutes. This time is often not enough for a detailed study of the credit history.
- Give priority to new and untracked banks. Such lending institutions need new clients like air, so they are more loyal to loan applicants.
- Be sure to try to apply to a bank that operates online and sends a credit card by courier or by mail (Tinkoff or Touch-bank).
- Apply for a loan from microfinance organizations (MFOs). Many of them issue loans even to those whose credit history has long been hopelessly damaged. Many have long-term loan programs (several months or even 1 year).
If you need to receive a large amount of money, get ready to provide the bank with a collateral. The collateral can be a real estate object, a car or boat, goods or material values, deposits or jewelry. In this case, the cost of the collateral must be at least the amount of the loan plus interest on it.
Collateral is a good guarantee of the borrower's fulfillment of their loan obligations. If the debtor is unable to repay the loan or repay the debt in full, the bank will easily seize the pledged property and sell it. If the subject of collateral is suitable for the requirements of a particular bank, the chance of getting a loan from this bank increases significantly, regardless of the credit history.
The exact list of banks willing to provide loans to people with a bad credit history is almost impossible. Firstly, because there are several hundred different banking institutions registered in our country, each of which has its own credit policy. Secondly, because the decision on each loan application is made individually, depending on the characteristics of the credit history, the number of documents submitted, depending on the availability of collateral, and others.
It is worth noting that a number of modern banks provide a "credit doctor" service for people with bad credit history. The essence of this service is that the client pays the bank a predetermined amount of money. After a while, this bank provides him with a small loan. In case of its timely repayment, the client will have access to larger loans in the same bank.
At the same time, under the terms of the agreement, the client should not apply for loans to other credit institutions and punctually fulfill his loan obligations. Thus, loans will be provided to the borrower in this bank, and a new credit history will be formed in the credit history bureau.
