To apply for a loan, you must need to have a good credit rating and an income source. A lender always checks your affordability before signing off on a loan. Your credit score informs them of the likelihood of making a default. The poorer the credit score, the lower the chances of approval will be. Though direct lenders consider applications from bad credit borrowers, it does not mean that they do not consider your credit rating. Lenders do not mind entertaining bad credit applications as they understand that financial irresponsibility is not always the cause of having a bad credit.
However, some people think that a good amount of income can also help you have a loan signed off on despite poor credit rating. Well, this is a myth. A lender will consider both your income statement and credit rating, but what if you need very small loan such as text loans.
Text loans are short-term funding sources that allow you to borrow money from a lender just with the help of text. However, these loans cannot be available for first-time borrowers because you need to send a personal identification number along with the text to a lender. Majority of the lenders do not disburse more than £750 when you apply for text loans. Do you really need a permanent job?
As far as it is about the disbursal limit, it varies from lender to lender. Some online lenders are ready to disburse up to £2,500 depending on your income sources. It clearly indicates that you must have a full-time job or business income to take out text loans regardless of your credit needs.
There are some circumstances when you may need money even though you do not have a full-time job, neither earnings from a business. What if you are a full-time student or you have lost your job? Getting a loan is undoubtedly difficult, but these two cases are exception. Whether you are a student or you have lost your job, you can borrow money by showing any income source other than full-time job. You can use income from side gigs or a fixed income source like rental income to prove the lender your affordability.
Of course, you do not need collateral to apply for short-term loans whether you have a bad credit rating. A lender will quickly review your income statement and if they find that you can afford to pay it off, you will get money at once. Text loans do not require collateral, neither a guarantor. However, a lender will not deny you arrange a guarantor for short-term loans if the default risk is high and you need money urgently.
Whether you apply for text loans or any other short-term loans, you must remember that you will have to pay high interest if your credit rating is bad. This is why it is important that you consider your affordability before applying for the loan. A missed repayment will add up the cost of your loan due to interest penalties and late payment fees.
Before you borrow money, you should look over your credit report. It may consist of errors that can pull your score and eventually you will end up getting a loan at high interest rates. Compare APRs with other lenders so that you choose the best deal. Create a budget and find out whether you have a net worth to pay off your debt. Text loans are the easiest funding source, but you need to have an income source to get them approved. If you are unemployed or you are a student, you should have income from your side gigs to borrow money.