Trying to get a loan approved when you have poor or bad credit is an uphill task. Lenders avoid those with bad and poor credit because they will most probably default on the loan. As such, those with poor and bad credit do not have many options to choose from. Your credit score could limit your options for securing a personal loan, but this does not mean that it cannot be done.
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Look out for innovative ways to help you get a loan when you need one. The listed measures below are a great starting point whenever you are looking for a loan. With these tips, you can rest assured of an easy loan processing eventually. Here are some tips to help you get a personal loan approved even if you have bad or poor credit.
Work on Rebuilding Your Credit
The first step to ensuring you can get a personal loan is starting to work on your credit. You can do this in several ways. To begin with, check your credit report to ensure that there are no errors in the reporting that could be affecting your credit score. Also, catch up on payments to show lenders that you are a safe bet. You should also ensure that you do not default on any payments moving forward. Paying your bills on time also improves your credit. Try not to close down any credit card accounts either.
Ask for a Loan from Family or Friends
Family and friends do not usually ask for your credit score before giving a loan. Asking a close family member or friend to give you a loan will, therefore, ensure that your credit score is not affected while giving you the money to handle whichever situation you may be in. However, you should agree on terms and conditions upfront so as not to affect your relationship. When your credit is not good, one way you can improve how it looks to lenders is by getting someone with good credit to co-sign on the loan. This way, this person’s good credit cancels out your bad credit giving you a better chance of securing the loan. Getting someone to co-sign the loan also guarantees the bank that if you default on your loan payments, the other party will step in to clear the debt.
Visit the Credit Union
Credit unions are owned by members instead of profit-seeking shareholders. You, therefore, stand a better chance of securing a loan with them than say with a bank. A credit union affiliated with your employer or your community further improves your chances of securing such a loan since they may consider your character. Additionally, credit unions are always looking for borrowers. If you have a common something in common with the credit union such as teaching, you can approach a credit union for such a profession to increase your chances of securing the loan.
Consider Online Loans
Online lenders have made it easier for people to secure loans despite their credit score ratings. Many people are attracted to them because they work fast and give you loans in the shortest time possible (as little as a few minutes) without paying a lot of attention to your credit score. The quicker you repay your loan, the higher your chances of securing another loan the next time you apply for one. Many online lending platforms also have their formulas for calculating credit scores. This makes it easier for you to secure loans with them. Getting a secured loan when you have poor credit is easier than getting an unsecured loan since the lender has something to fall back on (such as a car) if you default on payments. This guarantees the lender that even if worst comes to worst, they will still be able to recover their money by selling whichever asset you could have given as security for the loan.
But What About Student Loans?
Many students and their families must find a way to pay for tuition, books, fees and more. One of the more common ways for individuals and their families to pay for college education expenses is to use student loans. However, some people have lower credit scores, and they may not think that they can qualify for student loans. The unfortunate reality is that many people have lower credit scores because of a serious illness in the family, the unexpected loss of a job and other factors that are not related to their creditworthiness. If you have bad credit scores, the good news is that there are still a few options available for you to get a low-interest rate on a student loan and to pay for your college education. By exploring the funding options available, you can more easily pay for your college education and pursue a brighter future.
Federal Student Loans for Undergraduates
You may think that your credit scores would be reviewed for any type of student loan that you apply for, but this is not actually the case. If you are preparing to enroll in an undergraduate program, you can apply for federal student loans without having your credit scores checked. These are loans that the students will apply for rather than the parents. There is no credit check required for unsubsidized and subsidized federal student loans or for Perkins loans. You can easily learn more about your ability to qualify for these loan options by filling out a FAFSA or a Free Application for Federal Student Aid. This form is available online and can be completed within 30 minutes or less in most cases. By taking this important step, you can learn about the loan amount and loan terms you may qualify for.
Federal Student Loans for Graduate Students
If you intend to enroll in a graduate school program, you may be wondering what your loan options are when you have low credit scores. Both parents and students can apply for federal
Private Student Loans From Banks and Other Lenders
In some cases, individuals do not qualify for enough federal student loan money to fully cover the cost of their education, and they are looking for an alternative financing source. In other cases, they do not qualify for federal student loans at all. If either one of these scenarios applies to you, the good news is that you can still apply for private student loans. Banks and other lenders typically will review your credit report when you apply for private student loans, but some may be more lenient regarding credit scores than others. Keep in mind that these loan programs are often score-driven. This means that your interest rate may be higher if you have bad credit scores. You can, however, obtain the loans you need today, and you can always refinance your loans to obtain a lower rate in the future when your credit rating improves.
Options to Keep Student Loans as Low as Possible
Many people strive to keep student loan debt as low as possible. Others may not qualify for the full amount of student loan funding they need, and they may be looking for different ways to pay for their college education. Whether you want to keep loan amounts low or you have been issued a lower loan amount than you need, there are a few strategies you can consider using to get through college. For example, you can look for grants and scholarships to pay for some of your education costs. You can also take a lighter course load each semester and get a part-time job. This can help you to pay for some of your expenses out of your own pocket. While it may take longer to get through school with this approach, you can nonetheless find a way to pay for your education. There are other ideas as well, such as taking some courses at a more affordable community college or using CLEP exams to earn more affordable credit. While paying for your college education can seem challenging, many students are able to piece together a funding strategy through various sources. The first step to take is to apply for a federal student loan today. If you determine that you need additional funding, you can keep private loans and additional funding options in mind.