How to Get A Loan Application Approved Even With Bad Credit?
Moneylenders always take into account credit history when deciding whether to approve or decline a loan application. Your credit history includes any county court judgment, defaults on loan payments, late payments, bankruptcies, loan requests, etc. all of which affect your credit negatively. For a regular bank loan officer, this implies that he is considering lending money to a high risk client, because these kinds of records are known to lead to late payments and default.
Bad Credit Personal Loan Lenders
Bad credit personal loan lenders are willing to approve loan applications for people with bad credit. But you should bear in mind that these financial institutions usually charge a higher interest rate. This is due to the higher risk involved for the lenders when lending to people with past financial problems.
Nevertheless, your credit history will be checked if you apply for a loan. Your credit report will almost always be pulled and your credit score will be taken into consideration. But you don’t need to despair; there are many ways to increase your chances of getting approved for a personal loan even with bad credit.
Bad Credit Secured Personal Loans
If you have any asset you can use as collateral, the smart thing to do is to apply for a secured personal loan. In this type of loan your credit rating becomes less important as the value of the asset will be guaranteeing the loan repayment. This means that if you fail to pay the monthly installments, the lender has a legal claim on your property and you risk repossession.
Applying to the Right Lenders
If your credit is too bad, don’t waste your time with banks and other mainstream lenders, they’ll pull your credit report just to decline your application and this will affect your credit score negatively. At this point, you should aim to financial institutions specialized in bad credit personal loan. These firms focus on customers with past credit problems and are ready to deal with their needs.
You should bear in mind that the interest rate charged for such loans is higher than the one you would get from a bank. You may be able to reduce the interest rate by offering collateral or applying for a personal loan with a co-signer.