Have you tried proving yourself to someone because of a mistake you have made or your horrible history? If you have, then you would understand how difficult it is to prove yourself worthy to that someone. The same is true in applying for a loan despite your poor credit history.
It’s possible to obtain poor credit loans and online personal loans for bad credit using one or more of several methods including providing security for the loan, finding a surety or co-signer, improving your credit score, lowering your overall debt ratio, and seeking reputable lenders.
It is a well-known fact that lenders would usually, if not always, look at and assess your credit score before lending you the desired amount you want. It is a chore, and most of the time, you are left hanging because your lender has the final say.
But is it a dead-end for you already? Of course not. There are so many ways to apply for loans when you have bad credit. Thus, listed below are some tips for poor credit loans—further, an explanation of why online personal loans for bad credit is the best tip is provided herein.
Provide Security for Your Loan
Borrowers or consumers with a bad or terrible credit standing are often a turn off for lenders because they are seen as casualty or liability. The lenders’ impression of them is that they are a high risk since they are most likely to delay their payment or not to pay at all. The lenders will, of course, assess and study their credit score. And once, not impressed, they will not lend the sum these borrowers are asking.
Hence, if you are a borrower with bad credit, the best response to remedy your problem is to obtain a secured loan. Providing security for your loan or a secured loan means that your loan is supported with any collateral, and this collateral is called security. So, if you can’t pay your loan, your lender will run after the collateral to serve as payment for the money you borrowed that you failed to deliver.
Your collateral can be your house, car, personal watch, pieces of jewelry, or anything with value. This way, your lender won’t think twice about lending you the amount that you need. However, put in mind that you run the risk of losing the properties you post as collateral should you fail to comply with your obligation of paying your lender.
Find a Surety or Co-signer
With bad credit, you will surely fail to obtain a loan, especially when you ask for a larger one. Your lender will hesitate to lend you the amount. Thus, finding a surety or co-signer will solve your dilemma.
Asking someone to be your surety or co-signer means that your surety or co-signer will be responsible for paying if you default on your loan obligation. The co-signer will simply affix the signature after the borrower has completed the loan application. The signature is a guarantee that the loan will be paid. Further, your surety or co-signer will likewise be accountable for your penalties and late fees.
So, to obtain a loan even when you have bad credit, you must ask someone you can trust or who trusts you to be your co-signer. They can be your family member or trusted friend. You only have to arrange with your co-signer that you will later reimburse him once you have enough cash already. This is not a complicated set-up since you will be discussing the details of this loan procedure with your surety to avoid any problem in the future.
Search for Reputable Online Lenders
Eligibility for personal loans when you have bad credit is challenging. The lenders will quickly decline your request. However, it is not yet the end of the world for you since you may still be able to obtain pre approved personal loans bad credit by searching for reputable online lenders. And looking for reputable online lenders is the fastest way to receive online personal loans for bad credit.
This means that obtaining personal loans for bad credit is better than the traditional lending scheme or procedure. Why? It is because the review process for loan applications by these online lenders is more speedy and efficient. Some online lenders offer same-day approval, while traditional lenders will approve your loan application only approximately after three to five weeks.
Hence, among all the tips mentioned and will be discussed herein, taking online personal loans for bad credit is the best because of its efficiency, speed, and reliability.
Obtain a Lower Amount of Debt
Obtaining a lower amount of debt will increase your chances of getting a loan since its risk factor on the lender’s part is not that high. Your lender will not be reluctant to lend you the desired amount because it will be more comfortable and earlier to repay the borrowed money.
This also goes without saying that you must support your loan with a precise payment plan so that your lender will recognize your sincere intention to pay. Thus, your payment plan must include the amount to be paid and the time and manner of installments.
Improve Your Credit Score
Since your credit score is the basis of your lenders in lending you a loan, and it happens to be “bad,” as declared by your credit scoring agencies, it is incumbent upon you to improve it. You must at least take the necessary steps to change the “bad status” into a “fair one.” Of course, your lender would not automatically grant you the personal loan you are asking for. But one thing is for sure, you will get improved and better offer and interest rates.
Do not fret and stop thinking that improving your credit score is a waste of time. Remember that it is a natural consequence of your previous action. And there is no better way for you to obtain a loan despite bad credit than by improving your credit score. So how do you actualize it? It’s simple. You need only to strategize your payment plan to slowly and methodically pay your existing debts.
Moreover, you must not borrow money right away without paying your previous and existing debts because otherwise, it will be a significant turn-off from your lenders. You must gradually earn your lenders’ trust by complying with your obligation first. Lastly, prevent your credit score from dropping. Hence, you must select and limit the loans you will apply to increase your chances of paying off your debts and obtaining an improved credit score.
Get Your Credit Score Report’s Copy and Find Errors
There will always be a large possibility that your credit report is inaccurate due to some mechanical errors. For instance, your debts were miscalculated. Of course, you cannot allow your miscalculated debts to negatively affect you and your credit score because your lenders will undoubtedly take a look at it and decide according to it.
Thus, you must ask for a copy of your credit score report even at least once a year to study it and recompute it to be sure of the calculation. That way, you can find errors as early as possible and before obtaining a loan from your lenders. And if you find errors, you can easily dispute it and have it corrected.
As the saying goes, “prevention is better than cure.” Meaning to say you need to have your credit score report checked before getting any lousy impression from your lenders in the future because of an erroneous credit score report. It takes a lot of time, resources, and effort to explain to your lenders the wrongs in your credit score report. So why not make it a habit to check and study it yearly?
Consult a Reputable Financial Counselor
Some debtors obtain debt because they have to. But others do it because they can no longer control it. It has become a habit. And when due dates come, they panic because they could not devise a strategy to pay off their debts. Thus, it is frustrating because having too many unpaid debts affects their credit score and credibility as debtors.
So if you are in a similar situation with these debtors, seeking and consulting a reputable and licensed financial counselor is the solution. If you want to rebuild your credit, your financial counselor can help you financially and emotionally.
Your financial counselor can help you create a repayment plan to help you eliminate your existing debts, set up a budget and savings strategy, and negotiate with your creditors regarding payment terms and dates. It depends on your needs, and your financial counselor will simply adhere to your needs. You only have to explain to him your current status and your financial plans for the future.
Remember that the goal here is to help you become financially free as soon as possible. Not only that, it will aid you to change your negative habits when it comes to money. That way, you will more likely obtain a loan from your lenders without hesitations and worries. When your lenders see that you have a financial counselor, they will think you are serious about paying your debts. And thus, it will be more favorable to you.
Being qualified for loans even with bad credit is an uphill battle, but it does not mean that you can no longer find any lender given your status. The tips mentioned above, especially getting online personal loans, are ways to access loans even with a low credit score. Therefore, simply follow these, and your worry and misery will end in no time.