Interested in bad credit personal loans? If your credit score situation is not that bright, it might be hard but not impossible to get accepted for a new loan. In this article, we explain how you can get approved for bad credit loans.
Fortunately, there are some lenders out there who are open to help people with bad credit to improve their scores. Even if they do not offer the lowest interest rates, at least they are offering you a chance to consolidate your debts or finance your needs. One of the best solutions is to apply for personal loans. Most of the lenders will leave aside the credit situation and will take into consideration only your ability to repay what you want to borrow.
Here’s what you need to know about bad credit personal loans.
What exactly are bad credit personal loans?
Let’s explain this in the simplest way possible: bad credit personal loans are loans that ignore the credit scores and focus more on your possibilities of repaying them.
Usually, bad credit scores let any lender know that you are not a reliable borrower. It makes you a high-risk borrower for any major traditional institution. Most of the banks rely on your credit scores when establishing the loan terms. They need proof that you are a good investment and that you are going to repay everything on time.
If your financial history doesn’t recommend you very much (you failed to pay your bills on time, or you are in a large amount of debt), then you might not be that eligible for the traditional loans.
These are some signs that your credit score is not that good:
- You don’t pay down your debt, you pay only the highest interest.
- You always pay your bills late.
- You pay high interest
- You have problems getting a lease for housing.
All of these and some others will definitively affect your credit score in a negative way. So, getting a loan will be harder, but there are still some options for you. You just need to find the time to identify and analyse them.
What to do to get approved?
If your loan application has been rejected, don’t panic and look for alternatives. First, try to meet with your lender in person. Use your negotiation charm and try to convince them that you are trustworthy.
Prepare a folder of documents that might prove you’re a low-risk loan candidate. Prove that you have a stable financial history despite your bad credit scores. Bring proof of your tax refunds from the last two years, your job history, and payslips, and put together a list of all your assets, and bank statements.
If this doesn’t work, there are some other options to get approved for bad credit personal loans:
- Find a co-signer with impeccable credit scores. You need to find a person (family member, friend, colleague) that has the means to repay the loan if you are in the impossibility of doing this yourself. The good part is that once you find a co-signer, the banks will only take into consideration the co-signer’s credit scores. Your application will be equal to the application of a person with a good credit history. Moreover, if you obtain the loan and you make your payments on time, your credit will improve considerably and soon you will be able to borrow money without needing a co-signer.
- Find a Credit Union. Credit Unions are similar to banks, but, in fact, they are non-profit institutions. They could actually be a good alternative to get bad credit personal loans. You need to find unions affiliated with your field of work. If they have previously collaborated with your employee, then there are high chances they will ignore your bad credit history.
- Apply for a home equity loan. A HELOC (Home Equity Line of Credit) is the difference between the value of your home and your mortgage. In a mortgage, your house is used as a collateral anyway, so a home equity loan can be obtained without taking your credit score into account.
- Consider your friends and family. While loans from family members are not exactly that strict, they are definitely a good way of obtaining bad credit personal loans. Taking money from your close ones is more intimate and it makes you feel more comfortable. Treat this type of loan as you will treat a loan for a bank. Be respectful and formalise the deal with legal documentation. Put on paper the loan term, interest rates and the consequences of not paying off your debt.
- Look for online personal loans. Today’s technology made it possible for multiple lenders to open their doors for business. They offer competitive loans very fast, and most of the times, without any application fees or pre-payment penalties.
Even if you have bad credit score, there are plenty of options out there that will help you consolidate your debt or finance your needs. Before rushing into any decision, make sure you consider carefully all your options.
Start with an enquiry at Bad Credit Loans and get approved for bad credit loans.