In Nigeria, having a low credit score can make it challenging to get a loan, but there are loan applications that are designed with people with bad credit in mind. These apps provide loans to people whose credit histories have caused conventional lenders to reject their applications. This piece will go over a few loan applications that are accessible to those with low credit scores.
There are now credit bureau organizations in Nigeria that provide credit reports on bank customers. The reports are dependent on bank customers’ credit behavior or actions. A bad credit past generally harms your standing with your bank and may make it challenging for you to obtain a loan in the future.
Because the Central Bank of Nigeria is developing regulations that will make it nearly difficult for people with poor credit histories to obtain loans, maintaining a good credit score is crucial.
What are loans with poor credit?
Low credit scores or a recent credit past are referred to as having bad credit.
People with credit histories that show past financial mistakes or those who haven’t had time to establish a credit history can choose loans for bad credit. These loans can either be unsecured or secured (backed by property such as a house or vehicle). These loans have different conditions, fees, and interest rates depending on the lender.
Many banks, credit unions, and online lenders provide loans to people with bad credit, but each organization has a different standard for who qualifies as a “creditworthy borrower.” When searching for a loan, it’s crucial to compare all available lenders carefully because some have stricter requirements than others.
What are some typical errors that can harm my credit score?
Here are some typical errors that can harm your bank’s perception of your creditworthiness:
Late debt payment
Your past payment history is one of the main variables used to calculate your credit score. While one or two missed payments on your credit cards, loans, or other major obligations over time may not have a significant impact on your credit report, making it a habit (or mistake) can work against you.
Not making the necessary minimum payment
Your creditors will eventually report your account as past due, which can hurt your credit score, if you don’t pay at least the minimal amount due. Paying less than the minimum amount can also result in late fees and extra interest charges, both of which quickly mount up.
keeping the debt burden elevated
Potential creditors might have doubts about your ability to return if you have several bank loans, have “maxed out” or a sizable balance on your credit cards, or both. Additionally, creditors assess loan clearance or interest rate charges using this data (higher interest rates are used to compensate for higher risk).
Using a partial name on financial papers
There are numerous methods for bank accounts, credit applications, and other records that become a part of your credit history to appear on your report, many of which do not have many other identifying characteristics. Making ensuring that your information appears on your report involves using your full legal name.
Despite the aforementioned, it is still possible for you to obtain loans even if your credit is poor. Even if your credit score prevents you from receiving a favorable annual percentage rate, you may still be able to discover interest rates that are considerably lower than those you would probably encounter on payday loans.
How can I get loans with poor credit?
In general, many banks and online lenders are changing their personal loan options as a result of COVID-19.
There are still many companies that offer poor credit loans, though. These have low loan rates and practical services. Some of these lending companies are
- loan consolidators
- Individual financiers (P-2-P)
- Providers of personal loans with lenient credit standards
FairMoney is a loan application that offers loans to people with poor credit ratings. Loans up to N500,000 are available through the app, with interest rates varying from 10% to 30%. The app costs a 10% one-time processing fee, and the loan term can be between 61 and 180 days.
Carbon: Carbon, formerly Paylater, is a well-known lending app that provides loans to borrowers with subpar credit. Loans up to N1 million are available through the app, with interest rates varying from 5% to 15%. The app costs a one-time processing fee ranging from 1% to 5%, and the loan term can be between 15 days and 6 months.
Branch: Branch is a lending application that offers loans to people with bad credit. Loans up to N200,000 are available through the app, with interest rates varying from 14% to 28%. The program levies a one-time processing fee of 1.5% to 20% and offers loans with terms of 4 weeks to 15 months.
With the help of the lending app PalmCredit, people with poor credit can get loans. Loans up to N100,000 are available through the app, with interest rates varying from 14% to 24%. The application costs a one-time processing fee of between 3.75% and 14%, and the loan term can be between 14 days and 180 days.
Kiakia: Kiakia is a lending app that offers credit-challenged borrowers loans. Loans up to N200,000 are available through the app, with interest rates varying from 5.6% to 24%. The app levies a one-time processing cost of 5% and offers loans with terms of 7 to 30 days.
In conclusion, obtaining loans from conventional lenders in Nigeria may be challenging if you have a low credit score, but there are loan apps that are designed with people with poor credit in mind.
The loan apps described in this piece provide loans to borrowers with low credit scores, and their processing costs and interest rates are fair. Before using any loan app, always read the terms and conditions thoroughly and make sure you can repay the loan on time to prevent late fees and penalties.