Follow These Steps To Getting Your Loan Approved Despite Having Bad Credit History
Living in this day and age, with all the economic problems around us, is probably more complicated than ever. The wages are the same, while the costs of living keep going up, and people often find themselves helpless against the rising tide. Sure, you can venture into the investment world and buy some stocks and bonds, or invest in real estate, but that is quite often easier said than done. It takes an initial capital if you want to do any of those things, and that is hard to come by. That is usually the reason why a lot of people resort to loans, whether it’s to invest that money or to pay off some of their debts. It can be problematic, though, to try and get a loan if you have a bad credit history, but it’s not impossible. These steps will help you get your loan approved despite your bad credit history.
Review credit scores and reports
Before you do anything, you have to first find out just how bad your credit score is. It’s important that you understand where your finances stand, and this will help you devise a plan for the future. To do that, you’ll have to check your credit reports, which you’ll then later on use to calculate your credit score. It’s also important that you review these documents because there might be false remarks about your financial practices –– it does happen. So, you’ll want those remarks removed before you apply for a loan because they can be the reason why you won’t get it approved.
Improve your credit score
Now that you’ve reviewed your credit score and found out just how bad things are, you need to start working on improving it. The first step to achieve this is by making your payments on time. This helps lenders see that you are working hard to improve your score and that you just might be trustworthy. So, make sure you pay all your next installments and credit card charges on time because this will make a difference in whether or not your future loan applications will get approved.
Reduce your credit limit
Credit cards are important, and that is a fact, but you still will need to reduce your credit limit you want to improve your score. It’s advisable that you reduce your card’s balance to less than 30 percent of your maximum credit limit. That way, you’ll not only get to control your spending, but also improve your credit score since low card utilization is one of the most important factors in the overall evaluation.
Don’t get any new credit
Even if you do really need it, don’t apply for any new credit. It’s a really bad idea to do so with delayed payments on other cards, and it will just show lenders that you are not to be trusted, not to mention extremely reckless with your finances.
Taking these steps of paying on time, reducing credit limit, and not getting any new credit won’t improve your score overnight, but it will show lenders that you may be worthy of their trust and that you’re working hard to improve your situation.
Find a personal loan
After working hard for a few months to try and improve your credit score history, you next need to start shopping around for personal loans for people with bad credit. It’s not easy to find one with all the right boxes checked, but with a little hard work, it’s definitely doable. You’ll need to do a little digging on how to get loans even if you have bad credit, and you’ll realize that you actually do have a few options. For starters, you have credit unions, and they’re always a good option in these cases. They’re basically non-profit organizations with a fixed interest rate of 18%, which is just great because most loans for bad credit score charge very high-interest rates due to the associated risk factors.
There are other avenues you can look at for a personal loan, but you need to really do the research until you find a lender that offers a reasonable interest rate that wouldn’t cause you too much trouble.
Find a co-signatory
This is always a good option if you’re looking to get your loan approved. Since you have a bad credit history, you just need someone with a good score to co-sign the loan agreement. They need to be someone you have mutual trust with, a family member or a close friend, and that way, you prove credibility when asking for the loan, and most lenders would approve in this case.
Consider other options
There are definitely some unconventional means to get a loan, and some might just work for you and get you the money you need. For example, title loans are always a good option for people with bad credit scores, though they do charge higher interest rates and are often short term. So you need to take that into consideration before applying for one.
A payday loan is another short-term option, which requires just providing proof of income. It is an unsecured loan that is basically a cash advance. But you should also expect high-interest rates with this one, and you should understand that its duration is often just six months. So, if you’re looking for installments over a longer period of time, this is definitely not for you.
Things do get a little complicated when you want to get a loan with a bad credit score, but it is doable. If you try to follow these steps, you will definitely get your application approved. Remember the importance of working on your credit score by being committed for a few months, because it is very important that you make lenders feel you are a trustworthy person who will be capable of repaying the loan with its interest rates. Also, take your time comparing the different loan options for bad credit, because some will charge high-interest rates.