There are a ton of reasons why you might need a personal loan. Whether you are using it to help pay off credit card debt or cover an unplanned expense, you might need a helping hand, financially speaking. However, if your credit is not in such good shape, you could have doubts about your personal loan eligibility. The perfect lender does not seem to exist when your credit score is under 600. But that is not necessarily so. Let’s take a look at a common concern: how can i get a loan with bad credit?
The good news is that you can get a loan with bad credit. There is no catch here, but there is going to be some work involved. Because your credit score is not great, the process won’t be as easy as walking into the closest bank and signing at the X. You will need to do some research and choose where you apply wisely. If you are ready to learn how to get a loan with bad credit, we have got you covered. Follow these steps for getting a loan with less than perfect credit.
Before you dive headfirst into personal loan applications and possible rejections, you need to have an idea of where you stand from the perspective of your potential lender.
Understanding your credit score and report can show you what your lender will see when they review the same files, both good and bad. To see where your credit currently stands, check your credit scores for free. Checking your credit score won’t affect your credit because it is considered a soft enquiry or a soft pull, so it is not strong enough to damage what you already have.
You do not need an 850 credit score to get a loan, but your score will impact the terms and conditions you qualify for, such as loan amounts and interest rates. For example, bad credit loans will likely come with higher interest rates and may be issued for lower amounts.
Credit scores can range depending on the model you are looking at. On average, creditors consider a good credit score somewhere between 700 and 850. A fair score falls between 620 and 679, and low to poor credit scores are typically anything under 580.
If you see that your credit score is looking lacklustre, you may decide to improve it before applying for a loan. Some of the best ways to improve a bad credit score include paying down debts, reviewing your credit reports for errors, disputing any errors you find and limiting the number of hard credit enquiries on your credit history until your score rebounds.
Each loan application you submit triggers an enquiry into your credit, and racking up a series of hard enquiries lowers your score. When you decide to start applying, do your research and do not apply for every loan you came across.
You also want to take a good look at your credit report. Regularly checking and monitoring your credit report from the credit bureaus is the best way to track changes or catch instances of suspicious activity in your credit history. If you see something wrong, report and dispute it quickly.
Checking your credit reports also gives you a good indication of where you would stand with a creditor and may offer insight on what you need to do to begin repairing and rebuilding your credit score before you apply for any type of personal loan.
After reviewing your credit score and report, research the minimum score requirements that lenders look for. A good place to start is with the bank or credit union you currently use, as they already have an understanding of your financial profile.
Credit unions may have more flexible lending standards than banks and may be willing to offer you a small personal loan. If you have been at the same bank for years, consider asking the bank’s loan department how to get a loan. You may also want to enquire if your credit score would qualify you for a personal loan.
Lenders want the assurance that you can repay the amount extended in full, including any interest accrued. Thus, the amount they extend to you often depends on your ability to repay them.
Offering proof of income or having a cosigner can soothe lender fears and make them more apt to accept your application. A cosigner is a person that is guaranteeing the debt will be paid back. If the borrower fails to make the payments, then the creditor turns to the cosigner to collect the money owed on the account. Cosigners should have a good credit score and history, and if you need to have a cosigner to get approved, they may need to provide the creditor with proof of income as well.
It is a good idea to only apply for loans from a lender you trust and that has lending standards you feel confident you can meet. Remember, loans for people with bad credit might have higher interest rates or be capped at a lower amount, because lenders are more cautious with these loans. But that does not mean you need to do business with a less-reputable lender.
So, if you are in need of any help with getting a bad credit loan make sure to get in touch with Moolr today for more information.