Loans can help you get the things you need. But you must be very careful with loans. Not paying them back can cause big problems. Your credit score drops, making life much harder.

Having a bad credit score is not good. Lenders may think you can’t pay them back. They might say no when you ask for credit. Or they charge you way more in interest costs.

There are special loans like 12-month loans for bad credit for poor credit scores. These let you borrow even with no guarantor. The lenders take a bigger risk to help. But never miss any payments or it hurts more.

Be responsible and don’t borrow too much. Know what you can afford each month.  And make a budget and follow it strictly.

Loan Requirements

StepDescriptionTimeframeDocumentation Required
ApplicationSubmission of loan application with personal detailsImmediateID, proof of income, bank statements
EvaluationCredit and income assessment by the lender1-3 business daysCredit report, employment verification
ApprovalDecision on loan approval and termsVariesNone (post-assessment)
DisbursalTransfer of loan amount to borrower’s account1-5 business daysSigned loan agreement, direct deposit form

Credit and Eligibility Check

Lenders must assess if lending money to you is safe. So they check your creditworthiness using credit reports and scores. A high score shows you’ve managed credit well before.

They also verify you meet their basic eligibility criteria. This could include steady income, job stability, and existing debt levels. Each lender sets their own requirements to qualify.

This upfront review helps them understand the lending risk. Only applicants meeting their standards proceed to the next approval stage.

Loan Approval

Getting a loan approved can seem like a huge challenge. But with some smart preparation, it gets much easier.

Lenders care a lot about your credit score. Higher scores show you pay bills on time. Before applying:

·        Check your reports.

·        Dispute any errors dragging your score down.

·        Work on improving it as much as possible.

 Expected Fees, Penalties, and Charges on a 12-Month Loan

Fee/Penalty TypeTypical Rate or AmountCondition
Origination Fee1% to 6% of the loan amountCharged at disbursal
Late Payment Fee$15 to $30 or 3% to 5% of the late amountCharged when payment is late
Prepayment Penalty2% to 5% of the remaining balanceCharged on early repayment
Non-Sufficient Funds (NSF)$10 to $35 per instanceCharged per failed payment

Document Your Income Properly

Lenders need to see you earn enough to repay the loan. Have recent pay stubs, tax returns, and job details ready. For self-employed income, gather bank statements and profit/loss forms. The more organised proof you provide, the better.

Minimise Existing Debt Burden

Too much current debt can hurt loan approval. Pay down credit cards, loans, and other balances beforehand. Having lower existing monthly payments increases the affordability of a new loan.

Be Prepared with Paperwork

Get all commonly required documents ready before applying. This includes identity verification, address proof, and income/employment details. Having these handy avoids delays in the process.

Shop and Compare Rates

Not all lenders have the same qualifying criteria. Get pre-approved quotes from several providers to see which offers the best rates. Going with the most affordable option saves money.

Loan Offer and Agreement

Once you receive the official loan offer, read it thoroughly. Make sure all details like amount, interest rate, and fees align with expectations.

If acceptable, you formally sign the agreement. The lender also needs you to submit any outstanding documents. Things like identity verification, income proof, etc. required for disbursement. Providing these completes all requirements.

After signing, the loan package is considered fully approved. You’ve accepted the lender’s contractual terms and met the conditions. Disbursement occurs next.

Getting Funding Easily

Having a low credit score is not good. It means lenders think you can’t repay well. They may say no when you ask for credit. Or they charge you much more in interest.

However, there are special loans that private loan brokers provide. These let you borrow even with a bad score. The lenders take bigger risks to help you out. Just be sure to make all payments on time. Missing any can really hurt your score more.

The keys are being responsible and not borrowing too much. Know what you can afford to repay each month. Make a budget and stick to it strictly. Pay loans back fast to avoid lots of interest piling up.

Building Credit the Smart Way

Good credit opens many doors in life. Lenders see you as trustworthy to repay money borrowed. It lets you easily buy a nice home or car.

But building credit back up after mistakes is hard work. This takes time and making payments properly. Using credit wisely and repaying all debts fully helps.

Getting a small loan and repaying it perfectly rebuilds credit bit by bit. Secured cards used responsibly also help when done right. Each on-time payment gets reported and improves your score slowly.

Be patient, as raising credit takes lots of time. Celebrate small wins along the way. But stay focused on having an excellent credit rating.

Find Affordable Loans through Research

When needing a loan, shop around and compare. Don’t just pick the first lender you find. Different lenders offer diverse rates and loan terms.

Ask many lenders for their best rates and fees. Compare the full costs over the whole loan. A bit higher rate can get cancelled by lower upfront fees. Run the total numbers carefully.

Also, consider factors beyond just the cheapest pricing. Does the lender have convenient services and locations? Do they have good customer reviews? It’s wise to borrow from a good company to avoid surprises later.

With some research effort, you can likely find an affordable loan fitting your budget and needs well. Take the time to weigh all the options thoroughly.


Having good credit opens many doors in life. Lenders see you as trustworthy to repay money borrowed. It lets you buy a nice home or car easily.

But rebuilding credit after it gets damaged is tough.  Using credit wisely and repaying all debts fully helps. Getting a small loan and repaying it perfectly is wise. This rebuilds your credit bit by bit over months. Secured credit cards also help when used responsibly. Every on-time payment gets reported and boosts your score. Be patient, as raising credit takes persistence.

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