What is the average interest rate on personal loans for single parents?
Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.
Credit ratings/scores are calculated by credit reporting bodies such as Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service. These are separate organisations, so they use different systems.
Equifax gives scores between 0 and 1,200:
- 833 to 1,200 = Excellent
- 726 to 823 = Very good
- 622 to 725 = Good
- 510 to 621 = Average
- 509 or less = Below average
Dun & Bradstreet (through the Credit Simple service) gives scores between 0 and 1,000:
- 800 to 1,000 = High end
- 700 to 799 = Great
- 500 to 699 = Average
- 300 to 499 = Room to improve
- 299 or less = Low
Experian gives scores between 0 and 999:
- 961 to 999 = Excellent
- 881 to 960 = Good
- 721 to 880 = Fair
- 561 to 720 = Poor
- 0 to 560 = Very poor
The Tasmanian Collection Service doesn’t give scores. Instead, it prepares credit reports for credit providers and then lets those providers make their own assessment.
Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising credit applications, clearing up defaults and paying bills on time.
Another tip is to get the one free credit report you’re entitled to each year – that way, you’ll be able to identify and fix any errors.
If you want to fix an error, the first thing you should do is speak with the credit reporting body, which make take of the problem or contact credit providers on your behalf.
The next step would be to contact your credit provider. If that doesn’t work, you can refer the matter to the credit provider’s independent dispute resolution scheme, which would be the Australian Financial Complaints Authority (AFCA).
AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints.
If that doesn’t work, your final options are to contact the Privacy Commissioner and then the Office of the Information Commissioner.
Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application.
It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit, because there’s a higher likelihood that the personal loan will be repaid.
So a borrower with good credit is more likely to have a loan approved and to get that approval faster, while a borrower with bad credit is less likely to have a loan approved and to get that approval slower.
Bad credit history is caused by filing for bankruptcy, defaulting on your debts, falling behind on your repayments and having loan applications rejected. Lenders are wary of borrowers who demonstrate this sort of behaviour, because it suggests they might struggle to repay future loans.
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