How to Qualify for an online bad credit loan: Tips for Approval

Getting an online loan with bad credit seems impossible until you know what lenders are actually looking for. While your credit score matters, it’s not the only thing they look at.

This guide reveals the real approval criteria and proven strategies to strengthen your application, a step-by-step guide for securing a loan with a bad credit history. The key is not to hide your past financial struggles; instead, show what you can afford.

What Lenders Consider “Bad Credit” in South Africa

A credit score below 582 is a sign to lenders that you have had payment issues in the past. It is considered a bad credit score in South Africa by many lenders. But this one 3 digits number doesn’t define your entire financial life. In South Africa, different credit bureaus categorize scores as follows:

Does Bad Credit Mean Automatic Rejection?

Many people in South Africa have a bad credit history. A bad credit history makes it harder to get a short term loan, but it doesn’t mean automatic rejection. Online lenders mostly care about your current affordability, instead of focusing on your past financial mistakes.

Factors that affect your loan approval:

Income Stability and Proof of Employment

Financial stability is your strongest counterargument against a bad credit score. The affordability check primarily requires a stable source of income. Still, the regular income is not enough; you will also need a pay slip. Acceptable proof of income for different people is:

• Regular Employees: 3 months’ worth of payslips, or three months of bank statements that show regular deposits coming in from your employer.
• Entrepreneurs or freelancers: The bank statements from the last three months, or audited financial statements that show a steady income.
• Pensioners: Your pension statement or retirement annuity statement, something that covers at least three months.

Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio tells a lot about your financial condition. You can get rejected if you have a high DTI, even after having a high income. It is the ratio of your income and debt that indicates what percentage of your income is going towards paying debt. According to many experts, your debt payments should not exceed 30% of your income.

Complete and accurate information

Always provide correct information while applying for an online cash loan. Look for the errors by double-checking the application. Even a small spelling mistake in your loan application can lead to rejection. Also, provide the correct documents.

These are the primary needed documents:

• Bank statements of the past 3 months
• A valid South African ID card
• A phone number
• Proof of residency (recent utility bill, rental documents, or municipal document)

Strategies to increase the approval rate of loan applications with bad credit

Strategy 1: Improve Your Credit Score Before Applying

Even slightly improving your credit score before the loan application greatly increases your approval odds and lowers your interest rates. However, it is important to remember that credit recovery doesn’t happen overnight; it can take months to recover your credit score.

Strategy 2: Apply for the lowest amount

Decrease your loan amount to the bare minimum. Only borrow the amount you actually need. This is because small amounts of short-term loans have a higher chance of approval than larger sums.

Strategy 3: Try repaying your previous debt

You should always consider paying off your previous debt before applying for a new loan. This will help you decrease your DTI. Repaying previous debts also positively impacts your credit score, which will increase the chances of loan approval.

Strategy 4: Add a Co-Signer with Stronger Credit

Adding a co-signer with a decent credit score will help you easily get bad credit loans with a lower interest rate and more favourable terms.

Strategy 5: Be Honest About Your Situation

Be honest with your situation; don’t hide any crucial information about your financial history. Lying in your application can have both long-term financial repercussions and legal troubles.

Strategy 5: Choosing the Right Lender

The most important part is to choose only NCA-registered lenders. All reputable lender openly displays their registration number and will never ask you for an upfront fee before approval. These are some major red flags to consider before selecting the lender.

Getting a bad credit loan through CoreLoans: Step-by-step guide

It’s actually straightforward to get a loan with a bad credit history. Follow these simple steps.

Step 1: Give Us Your Personal Details

The first step is to fill in the personal information on the CoreLoans application. You’ll need to fill in your personal details and the required loan amount. This information is the basic need for our lenders to verify your identity and find the right type of loan option for you.

Step 2: Get Your Personalized Loan Options

Once you enter your personal and financial details in the online loan form, we share them with our network of NCA-registered lenders to see what they can offer. They’ll take a look to decide if they can offer a loan suited to you. It is a soft check, and it won’t lower your credit score.

Step 3: Fill out the lender’s Application Form

If you get through this stage, you’ll be redirected to the lender’s website, where you’ll need to fill out their full application form. There, you will have to provide your required details and documents.

They’ll use that to perform a proper affordability check and a standard credit check to make sure you can afford the loan. That’s the part where they’ll ask for a copy of your credit report.

Step 4: Get Your Cash

Once approved, the lender will transfer the funds to your bank account on the same day. However, if you apply on a weekend or a public holiday, the transfer will be delayed because the banks are closed. In this case, you will get your money on the next business day.

Next Step: Building Financial Wellness

Getting approved for a bad credit loan isn’t the end goal. It’s a tool for financial recovery, which should be used wisely. This increases our credit score, aiding in future financial struggles. Make timely repayment, keep track of your credit report, and budget for future emergencies. This is the secret to maintaining healthy finances and living a stress-free life.