The most damaging aspect to finding yourself with a low credit rating is not actually its effect on the chances of getting loan approval. It is the psychological effect it has on borrowers, who believe it is too difficult to get personal loans with bad credit to warrant the effort.
But the truth is that there are many options still open to bad credit borrowers, even if their score is extremely low. All that is needed is to compile and submit a strong loan application, and to have a little faith in an approval system that is based mainly on facts. It means if the boxes are ticked, then loan approval with low credit scores is very possible.
Of course, there is no such thing as a guaranteed loan approval, but the chances of getting the green light can be so great that it would be safe to feel confidence it will be granted. But what are the steps necessary to achieve this? There are 3 key steps that can make even large personal loans attainable?
1. Address Your Credit Record
The first step is to find out what your credit status is, and address any weaknesses there may be in it. Sewing up these weaknesses can greatly enhance the chances of getting a personal loan with bad credit. And to do this, the first move is to get a copy of your credit report.
The reports are provided by the three credit agencies (Experian, Equifax or TransUnion), and are available free once every year. Other services will often provide the report at a cost, so watch out for them.
Once the details of your report are known, a plan can be formulated to secure loan approval with low credit scores. If any errors are spotted, like a cleared loan not accounted for, then have the report reviewed and provide the reason why. This should result in a higher score, which will help when applying for the personal loan.
2. Finding Lending Options
The next step is to find the right lender, and the right terms to ensure the personal loan with bad credit is affordable. The first port of call should be your current lender, who may be open to negotiating good terms. Your lenders already know your credit reputation, so if there is a good relationship, approval is more likely based on past experience.
Another option is to check the Internet, where a multitude of online lenders offer superior loan deals than those available from traditional lenders. Online lenders are recognized as experts in lending to bad credit borrowers, so securing loan approval with low credit scores is also very likely. They charge lower interest rates and have longer loan terms, so repayment is more affordable.
A third option is private lenders, or small commercial firms. They are usually subprime lenders, which charge higher interest rates but offer a near-guaranteed personal loan approval.
3. Check Out Intermediary Services
If the search for a personal loan with bad credit comes up with nothing, the last resort is to hire an intermediary finance company to search more deeply. These are not lenders, but will seek out the best possible loan deal on your behalf. They have a database of contacts in the lending industry, so finding a loan is practically guaranteed – the problem is the costs involved.
The finance company will charge a fee for their services, but this is relatively small. But because lenders on the database know applicants are desperate for funds, their interest rates on personal loans are very high, so the deal will be very expensive.