Sometimes, people have credit reports with disapproving information like missed payments, high debt, bankruptcies, as well as the amount of money that they owe because of losing some lawsuits. At such times, the lenders might even back away and they wouldn’t be wrong in doing so. This is because their credit doesn’t look very good.
It might be challenging for people to get a loan with a bad credit. But it’s certainly not impossible. There are various different ways for such people to enhance the chances of getting their bad credit loans guaranteed approval as suggested by the experts.
Top 9 Tips to Get Bad Credit Loans’ Guaranteed Approval
Following are the top 9 tips to be able to get a guaranteed approval for loans even if your credit reports show bad credit:
1. Know How Bad your Credit Score is:
People often feel that their credit score is very poor but they become rather surprised when they actually check and find that it’s not so bad after all. It is necessary to know how bad your credit score really is. This can be achieved by finding credit reports from Experian, TransUnion and Equifax.
It is important to read your credit reports carefully to evaluate the damage. You won’t really lose your chances for getting a loan approved if you have just one late payment or a bankruptcy in the past, given that you’ve used all your credit products carefully ever since.
People with credit scores that are well above 640, are basically within an average range and they might have safer borrowing choices than they think.
2. Include Positive Data in your Credit Reports:
If your credit reports don’t contain sufficient data listed in them, lenders will consider you as someone with bad credit. This is because your past records will give them an idea about your future records as well. If there isn’t enough data, your lender won’t have enough information about you as a possible borrower, thereby getting your loan applications rejected.
If you’ve been doing a good job at managing all your household bills like your utility accounts, as well as cellphone bills, you have the option of including them in your credit report using Experian’s Boost package for free. These payments are then recorded and considered positively in your credit reports. You will then be taken as a financially responsible borrower by your lenders.
3. Check the Credit Prerequisites:
When people apply to get their loans approved, lenders consider their credit scores as one of the chief factors, especially in the cases of unsecured loans. All of these have their own minimum value which the borrowers must be able to meet to qualify for the loan.
Every lender doesn’t ask for perfect credit. But it is essential to fulfill the lender’s requirements even if your credit score is perfect, or else they’ll simply reject your application. You must ask your lender about your credit score, as well as whether your credit history qualifies for the loan before applying.
4. Check the Requirement of the Minimum Income for Loans Approval:
You might come across lenders who have set a minimum cutoff value for the income for the approval of loans. This might not be mentioned on your lender’s site, therefore, you’ll need to contact the lender directly or check some reviews online.
Many lenders find it as a necessary factor just like a person’s credit rating. This is for obvious reasons. People, who don’t have a good enough income, might not be able pay their loans back later on because they can’t afford it.
5. Check their Employment Requirement:
Some of the lenders might require for the borrowers to have a consistent employment by a proper company for several years. Some might even consider that the borrowers get their income via direct deposit.
6. Have Enough Insurance:
Some forms of loans, particularly bank loans require for the borrowers to offer some kind of collateral for the purpose of borrowing. The collateral could be in the form of a part of your estate, or even some cash money which can be used by your lender if you don’t pay back.
If you really don’t pay back, you are likely to lose your collateral. However, it does lower the risks faced by your lender and this might even assist you in qualifying for your loans, as well as getting better terms and rates.
7. Set a Limit to your Outstanding Debt:
One of the various ways of figuring out the amount of loan that you can really afford to borrow is by assessing your DTI (debt-to-income) ratio. This way your lenders can know that you will be able to pay back the loans every month, as well as how careful you really are with your money as a borrower.
People who have high DTIs have already been using a lot of their money in paying off their other previous loans. It’s better for them to pay back a bit of their debt if their DTI values are over 43%.
8. Confirm that the Purpose of your Loan is Allowed:
Even though personal loans can be used for various different purposes and they’re almost always open, every lender might not allow you to use the loans for everything. For instance, some lenders might not permit you to use the loans for business or secondary education expenditure. It’s best to confirm and ensure that your lender will allow you to use the loan for the purpose you’re actually borrowing it for.
9. Confirm your Details:
It would be a good idea for you to check and confirm all your personal details again before submitting your application for the loan. This is because your application might stand a chance of getting rejected if you miss out on even the minor details. Without a verification of your personal details, your lender might not offer you the loan you need.
Applicants can’t know for sure that their application would get approved. The lender has the authority to reject applications even if they meet the criteria set.
However, you can prevent making certain common mistakes which might lead to the rejection of your personal loan application. Follow the 9 tips mentioned above to enhance the chances of your bad credit loans’ approval.