You may come across an emergency at any time. Most of the people have reported in a survey that unexpected expenses haunt them when they are not prepared for them. Despite stowing away money, at times, you find yourself running out of money. Thankfully, there are emergency loans.
When you apply for a loan, a lender must run an affordability check. This involves examining your credit report and financial statements to determine your past payment behaviour and repaying capacity.
A reputed direct lender is not obligated to sign off on your application without a credit check. Even if you are borrowing money to fund small, unexpected expenses, a lender has to check your credit rating. If your credit report is not up to snuff, you can contact a lender who runs soft inquiries. Emergency loans for bad credit are not available without a credit check. Search inquiries will be either hard or soft.
Lenders claiming to offer these loans without credit checks should not be trusted because you might end up borrowing more than your affordability, which will throw you into an abyss of debt.
Ways to keep your credit file healthier
You should always try to maintain your credit score even if you can get bad credit loans for a low score, so you can qualify for lower interest rates. Here are the ways to do up your credit rating:
- You should create an emergency budget so you do not have to borrow money from a direct lender every time you are in need of money.
- If you still need to borrow money, make sure you will pay them back on time. Borrowing more than your affordability will roll up your debt.
- Do not use a credit card for all sorts of purchases. Set aside the respective money so you can pay off the bill on time.
- Avoid using up more than a quarter of the total available limit, and make sure you pay off the balance before your credit card company informs credit reference agencies.
- You should not owe too much debt even if you do not struggle with payments. A high debt-to-income ratio will pull your credit points despite the fact that you make all payments on time.
- You can choose a credit builder loan if you have already a poor credit rating. On-time payments over a length of time will help fix your credit score.
- Do not apply for a new loan immediately after paying off another because it shows you are always reliant on loans to meet your expenses, and, as a result, your credit score will rapidly plummet.
Ways to create an emergency budget
It is vital to create an emergency budget to be on top of your expenses when cash is tight. Here are some ways to do so:
Whittle down your food costs
Most of your money goes towards your food expenses. You should carefully examine how much you spend on food and figure out how you can bring down the food bills. Here are some useful ways to cut back on the food costs:
- List everything you have and work out how you want to use it. If you have a lot of rice or other staple food items, try to consume it before buying other items.
- Check if there are any frozen objects, and you can make dinner out of them.
- Make a list of cheap meals when you are badly off. Porridge, pasta, sardines, toast, potatoes and soups can fill your stomach. You can include legumes and pulses that are already available in your house.
- Shop around for thrift stores to buy groceries at reduced prices.
- Create a list of items to be bought and then go to the supermarket, so you do not buy what you do not need. Stick to the quantity you need.
- If you are cash-strapped, consider benefits from the government to keep your head above water.
- Use coupons and vouchers to take some money off your food bill.
- Avoid dine-out and takeaways. Cook meals at home instead.
Use some casual methods to save money
You should have a separate savings account to dip into in case of emergencies. But if that does not seem to be possible, use the following tricks:
- Grab a jar and put money into it.
- Buy a piggy bank and keep money in it. You do not need to be consistent if your budget does not admit of it. Just do it as and when you have got a chance to stash away.
- Put money between the stack of clothes.
- You can keep a few dimes of legumes and pulses in the jars.
- Sell your old stuff.
Cut down on your travel costs
You can reduce your travel costs and save that money for a rainy day.
- Walk to cover shorter distances.
- Use public transport to go to work or go by bicycle.
- Save money on the gym by brisk walking, jogging, etc.
- Plan your errands to save money on fuel.
- Buses are more affordable than tubes.
Other things to save money for an emergency cushion
Here are the other things you should bear in mind to build an emergency budget:
- Make a debt payment plan if you already owe too much. Give priority to high-interest debts if you cannot pay off them all.
- Avoid borrowing more because it will worsen your financial situation.
- Talk to a debt management company or a financial advisor if you need any help with debt settlement.
Summing up
No loans can be provided to you without any credit checks. If any lender says that they can, it should immediately raise the alarm bell. Instead, you should work out to create an emergency budget. It will help tide you over when financial emergencies crop up.
