Getting Personal Loans with a Bad Credit
Be it having a medical emergency, going on a vacation, planning a huge project, or whatever you need the injection of cash for, personal loans have got you covered. But what if you have bad credit? Would you still be able to get one?
Simple answer is yes, you are. Albeit getting higher rates compared to people who have good credits, you still have a lot of options to choose from.
Getting approved certainly isn’t going to be easy, but not impossible. Yes, a good credit score is desirable when applying for a loan, but that’s not the only things lenders and organizations look at when evaluating you. With that said, below are the things that you can do to improve your chances of getting approved.
Things to Do
Clean up your credit – Credit Scores is one of the major things that are considered when you’re applying for a loan.
Check your reports, see if there are any errors. Errors can hurt your scores, the sooner you can dispute the error, the better.
If you have any existing loans, take care of the payments, make sure to pay extra whenever you can. Doing so will benefit your payment history and credit utilization ratio, which makes up of 65% of your fico score
Rebalance your income – There is what they call a debt-to-income ratio, lenders will always ask for your bi-weekly, monthly, and annual income and compare it to how much debt you are in. The lower the debt-to-income ratio is, the better.
Don’t ask for too much cash – Asking for more than what you can pay can and will be seen by lenders as a high-risk applicant.
Get a co-signer – Adding a co-signer with good or excellent credit will be a huge plus, a co-signer is equally responsible for the repayment if you are unable to do so. In choosing a co-signer, make sure that he/she can afford the risk.
Talk to your co-signer, lay everything on the table, you’re not only risking your co-signer’s financial wellbeing but also your relationship with that person.
Find the right lender – Look for a lender who is willing to work with you, give you the best rates, and that you pass his requirements. Doing so will save you more time and can focus on how to make your application better.
Having good credit is definitely something to be proud of, while on the other hand, having bad credit can prevent you from getting so many things, such as a car, a new apartment or a new home.
If you feel like your credit score is taking a huge hit because you can’t pay your bills on time, then it’s time to do something about it.
So what’s a debt consolidation? A debt consolidation is where you combine your unsecured loans into a single payment, usually under a much lower interest rate. And a debt consolidation loan on the other hand, is getting a loan to pay off your loans. It’s very important to keep in mind that debt consolidation is only a good idea when it offers a lower interest rate. Otherwise, you’ll be paying even more than before.
Credit Scores play a huge part in qualifying for a debt consolidation loan, because it’s where lenders determine how much fee you’re going to get charged with. Having an excellent credit score wouldn’t cost too much of a problem, but when you have poor credit, the application will be extremely difficult, but not impossible.
Where do you go if you want to get a debt consolidation while having bad credit?
Credit Unions – Credit Unions are non-profit organizations, which focuses on the small communities of people. A union is regulated thus making them a bit strict on their requirements but once you’re a member, even with credit, you’ll have no problem getting a loan.
Online Debt Consolidation Lenders – These lenders will pay all your debts and consolidate it into one, which you pay on a monthly basis. Usually, when applying with bad credit, they’ll give you options on the amount you want to consolidate and the term.
If you think debt consolidation would help you, I’d suggest looking into it further, explore, and compare lenders until you find the rate terms for you.
There are a number of reasons why your loan application may be unsuccessful. Your credit score is one of them. While it may be hard for you to qualify for a standard loan when your credit score is not impressive, you’ll find that it is possible to qualify for bad credit loans.
What Having a Bad Credit Means
Borrowers are assessed by lenders in terms of their creditworthiness. One way to gauge this is their credit scores. It is a reflection of how well they have managed their finances and debts in the past. If you have been meticulous in your debt payments before, you can expect that your credit score will be high. If you have had missed or late payments and defaults, expect that your credit score will take a hit too.
Loans for Bad Credit Borrowers
Bad credit loans are available for borrowers with less than ideal credit scores. They are usually unsecured, small loans that can be repaid over a period of 1 to 2 yes, depending on the lender. It is possible to borrow between $1,000 and $5,000 and have the payments spread out in terms of your preference.
To qualify, you’ll need to be a resident of the United States and more than 18 years old you will need to be employed or have some source of funds that you regularly receive every month. You must have an active bank account and should also qualify in terms of your monthly income. Just remember that your low credit score would mean high interest rates for the loan.