Important Tips to Secure Personal Loans for People with Bad Credit
If you’re one of the millions of Americans with bad credit, you probably have heard that banks are becoming less and less willing to approve personal loans for people with bad credit. However, don’t fall into the mindset that you will never be able to get a personal loan. There are ways to secure personal loans even if you have an abysmal credit score.
Let’s look at the facts. People with bad credit are seen as high risks to lenders due to the fact that they have a habit of not paying debts on time or not paying back loans at all. Due to this, it will be difficult to obtain a loan from a traditional lender in most cases. Also, even with the tips that we have to offer you, your low credit score will generally mean higher interest rates for personal loans that you will be able to get. But once you get approved for your personal loan, you will be able to start slowly rebuilding your credit to get it to a point where your interest rates stable out and you will be paying significantly less interest on any personal loans. So with that said, here are some great tips to secure personal loans for people with bad credit.
Use Collateral: Lenders may see you as a risk since you have bad credit, but offering up some collateral for your personal loan will really help you get approved for loans you otherwise would be unqualified for. These loans are called secured personal loans because the loan is secured by your collateral. If you know you have the ability to repay your loan, utilizing some items of value for collateral can make up for your lack of credit. Some great forms of collateral are car titles, commodities, furniture, or pretty much anything of significant value. We must warn you to be weary of using your home as collateral for a loan because defaulting on your loan could mean you lose your home.
Bad Credit Lenders: Seeking out lenders who specialize in loaning to people with bad credit is a great way to help get a personal loan if you have bad credit. These lenders differ from banks and other traditional lenders because they look at factors such as your income, more than your credit score in order to approve your loan. Bad credit lenders are more understanding of your situation and are willing to give you a chance.
Get a Steady Job: Having steady employment can go a long way with lenders in order to approve you for a loan if you have bad credit. Lenders like to see that you have income coming in and will be able to repay the loan if you’re approved. And if you are unemployed, you shouldn’t be applying for loans because you most likely will be unable to repay the loan which will land you in even more debt. Even bad credit lenders will be a little hesitant to lend you money if you have bad credit and job history filled with gaps of unemployment. Generally, you should be employed with your current job for at least 3-4 months to look better/more reliable in the eyes of lenders.
Start Small: Make sure the amount of money that you’re seeking your personal loan for is sensible. Most bad credit loans can be granted for small amounts. If you’re only working part time and making less than $1,000 a month, seeking out a $3,000 bad credit loan might not be the most sensible thing. You will end up paying a hefty amount of interest and if you default on the loan or miss a payment, be prepared to pay even more in fees.
Take these tips into consideration if you have bad credit and are seeking a personal loan. Know that it is possible for you to obtain a loan with a little bit of help and if you know where to look.