In America, personal loan debt has reached over $125.4 billion.
While you may not want to have more debt, sometimes it’s necessary to take out a personal loan.
Lenders use your credit score to determine your creditworthiness. But what if you have bad credit? Here are quick tips for getting a bad credit loan approval.
Look Into Credit Unions
Credit unions may be a good place to start looking at a loan approval if you have bad credit. That’s because a lot of them are willing to work with people who have bad credit.
Credit unions are typically smaller banks and are focused on their community. You may get a more personal approach when it comes to reviewing your application, and they can get to know you rather than just making a decision based on your credit score.
There is typically a more human reaction when it comes to credit unions.
If you can’t find a good credit union, then try checking out local and small banks in your area. They will also have a focus on the community and may be able to offer lower, more reasonable rates as well.
Check Out Online Lenders
Online lenders may also be a good place to start if you’re looking for a bad credit loan.
There are three different kinds of online lenders: peer-to-peer lending services and direct lenders.
Peer-to-peer lenders have you borrow from individuals online rather than from their own funds. One of the advantages of peer-to-peer lending is that the marketplace allows people to accept a higher amount of risk than a bank would. So, as a bad credit customer, you may be able to qualify where you would traditionally not qualify with a bank.
A direct lender on the other hands lends their own money to you. This is also different from a bank, where the bank is lending out money deposited into their bank. Because direct lenders are not restricted by bank regulations, they can also lend to higher risk customers than banks.
Find a Cosigner
You could always ask your friends and family to loan you money, but they may not be willing to do that.
However, they could join your loan as a co-signer.
If a bank won’t offer you a loan, you could have someone with good credit co-sign your loan, basically guaranteeing that if you don’t pay back the money, they will take that responsibility from you.
This can be risky, but if you have someone willing to do it, it may be a good option to look into.
If you have a bad credit score, offering collateral to secure your loan may make banks more willing to offer you a loan.
When you offer something of value, this shows the lender that you are taking this seriously. They are also more inclined to grant it because they know that they have an option to get money if you really don’t pay the loan back.
However, you need to be careful when offering up different collateral. For example, you probably shouldn’t offer up the equity that is in your home because you may be forced to leave it and foreclose it, which could make your situation even worse.
Get Your Loan Approval Today
Don’t let your bad credit discourage you, you could still get a no credit check loan approved.
There are many different options out there for you.
Check out this blog for more information on how to get a loan with bad credit.