Our Guide to Understanding How Bad Credit Loans Work – What to Know

February 13, 2020

One of the worst situations that anyone could possibly ever experience is not being able to take out a loan when they need it most because of a poor credit score. Yet, this is a common life experience that many South Africans face. 

Fortunately, living with bad credit doesn’t have to pose such a great impediment to living your best life and eventually achieving financial freedom with the help of one tool: bad credit loans.

What constitutes a poor credit score?

Poor credit scores are simply defined as a rating that informs loan providers that a certain applicant may not be a trustworthy candidate for a loan. 

In South Africa, a poor credit score is typically set around 650 at maximum and only gets worse as the figure goes further down. By having a poor credit score, you present yourself as someone who is far less likely to repay a loan that you’ve taken out. This results in a pre-emptive rejection from most loan providers out of understandable concern. 

Alternatively, however, people with a poor credit score are not totally hopeless as they can earn a chance to redeem themselves and their own ratings by taking out a bad credit loan and taking the necessary steps to mend their reputation. 

What are bad credit loans? 

Bad credit loans, to put it simply, are a form of financial assistance that works as a rebadged version of a personal loan that’s built to help anyone with a situation that needs money to fix but doesn’t necessarily have the credit score to do so. For most banks, a credit score of 650 or lower merits automatic rejection or significant difficulty in attaining financial assistance. For bad credit loans, however, this score (or anything lower) may still suffice.

When used correctly, bad credit loans can function as a form of relief for any consumer who grapples with their poor scores and experiences greater limits in the form of restricted borrowing options. 

How can a bad credit loan be used?

Well, there’s a short and a long answer to this particular question. The short answer in the case of bad credit loans is that they can be used for just about anything in particular. On the other hand, the long answer to can go a few different ways, namely: 

  • For boosting one’s own credit score to attain higher limits and more loan options
  • For emergency hospital or dental bills
  • For car impound payment or repair bills
  • For consolidating credit card debt 

The benefits of taking out bad credit loans

Aside from the fact that they’re essentially engineered to assist those with significantly-poor credit by providing a second chance for help, there are a few other reasons bad credit loans are worth considering: 

  • They have lower interest rates as compared to other “quick pay or grant” options in the market
  • They are offered by many reputable South African lenders (such as Hoopla Loans)
  • They have adjustable repayment term lengths
  • They have faster application, approval, and granting periods that take no more than a few minutes or hours 

Final words

Bad credit loans provide an immensely-reliable form of financial assistance for anybody who might find themselves in financial difficulty, especially when their credit scores are working against them. If you’re in South Africa and are struggling with a credit score that’s holding you back from seeking proper financial assistance, get in touch with Hoopla Loans and learn more about our Bad Credit loans today!