When you are looking to get a loan for something important, we’re sure you must’ve come across at least one person asking about your credit score. 

In today’s economy, no matter what you do, you’re almost certainly going to need a credit score to get credit. It doesn’t matter if you’ve got all the money in the world, lenders will still look for bad credit red flags in your credit history.

Well, not all lenders. In an attempt to encourage fair lending, we at Salad Money provide loans to workers, without using your credit score in the initial lending decision. 

We do this with the help of our open banking based affordability assessment, which is unaffected by poor credit scores.

However, while we provide you with fair loans without the need for a good credit score, not everyone does. Therefore, until our assessment methods are implemented universally, it is important for you to take care of your creditworthiness.

To help you out, we’ve pulled together some examples of bad credit red flags to avoid in order to improve your chances of having your loan application approved. 

Whether you’ve got a bad credit history or not, keeping these bad credit warning flags in mind is essential, so let’s begin. 

Debt And Income

With so many ways to evaluate a person's ability to pay back a certain amount of debt, the debt-to-income ratio is the most reliable. A low score is considered by most lenders to be a bad credit red flag. 

The ratio is simply calculated based on your net monthly income and your loan repayments. The lower the ratio, the better fit you are for a particular loan.

In order to improve your credit score and make you a more appealing candidate, your job is to reduce the ratio. 

The first thing you need to do is repay as many outstanding debts as possible. From the smallest to the biggest, try your best to clear them all. Then, work on reducing your monthly expenses by cutting down on unwanted expenses to increase your net income. 

Repayment Record

Now that lenders have examined your ability to repay your loans, how can they be certain that you are willing to repay the debt? This is where your repayment record comes in.

By analysing your previous loans and your repayment history, lenders are able to evaluate your repayment reliability.

If you’ve got a clean repayment history - meaning you generally repay in full and on time - lenders are more likely to view your application favourably. However, if you’ve got an unreliable history with debt repayments, you’ll have what lenders call a “bad credit history” and hence, you’ll have to turn to bad credit loans. 

In order to avoid that, we suggest you work on improving your loan repayments and maintain a clean repayment history.

Your Credit Score

Your credit score is the product of your credit report, which is generated by various credit rating agencies across the country. 

The summary of all your financial activities lies in these credit reports and thus your reliability with debt.

If you’ve got a bad credit score, there are various tips to improve the credit score that you can try.

With an improved credit score, you can efficiently enhance your creditworthiness and easily secure loans from various lenders.

Get Fair And Affordable Loans With Salad Money

Now that you know all the bad credit red flags to avoid, you can work on your credit history and get better loans. However, if you’re a victim of the credit score system and are having trouble getting loans from lenders, you don’t have to worry anymore. 

With our open banking based affordability assessment, you can now get fair loans without your credit score being used in the initial lending decision.

Applying for one of our new loans doesn’t impact your credit score. We use Open Banking in our initial assessment. If successful, we report your loan to the CRA’s (Credit Reference Agencies). Your credit score won’t hold you back from being eligible.

To learn more about our fair lending, contact us now!