If you are thinking about how to get personal loans with bad credit, then Moolr are here to help, with a simple guide to what you can do to help.
Improve your Score
If this is not an emergency, the first step to get personal loans with bad credit is to improve your credit score. Then you can comfortably afford the loan you need. Start by making on time payments, especially on credit cards. Reduce the balance on cards to under 30% of the credit limit allowed. Finally, do not apply for any new credit.
The combination of those three factors – on time payment; low credit utilisation; no new credit applications – account for 75% of your credit score. Getting personal loans with bad credit is possible but it’s easier to get loans with good credit! It is not unrealistic to think that making an effort on those three fronts could raise your score by 100 points in as little as 3-6 months.
Get personal loans with bad credit – Credit Unions
If, however, this is an emergency and your application for a loan has actually been turned down repeatedly due to poor credit or no credit, it might help to ask a bank or credit union loan officer for an in-person interview to convince them you are creditworthy.
Be Prepared
If you get that interview, be sure you are prepared with documents that prove you are a good risk. Lending institutions love stability. If you can show them that you have lived in the same house and worked the same job for several years, it definitely helps your case.
Common things to bring that prove your credit worthiness include:
- Tax returns, W-2s and 1099 forms from at least the last two years
- Details of your job history, including salary and pay stubs
- List of assets such as home, car, property and where you stand on paying them off
- List of unsecured debts such as credit cards and medical bills
- Whether you pay or receive alimony or child support
- Bank statements for checking, savings and CDs
Not all of these documents are required, but if you have a poor credit history, anything you can produce that demonstrates you have become responsible with your money will be considered a plus. Getting personal loans with bad credit thus becomes more likely. You should also expect the lender to ask questions about your credit history that may reflect negatively on you.
Get personal loans with bad credit – Lender Questions
- Have you been involved in any lawsuits?
- Do you have any judgements against your or items in collection?
- Have you declared bankruptcy or had a foreclosure judgement against you?
- What is your ethnic background?
The last question would seem to violate anti-discrimination laws, but it is required by the government so that it can keep data on lending to minorities and make sure they aren’t routinely turned down or charged excessive fees.
The purpose of an in-person interview is to convince the lender that if you receive a loan, you can comfortably make payments. Any evidence you have that can support that fact – especially proof that you pay off loans on assets like a car, motorbike, or boat in the past – are going to work in your favour.
