Trying to get a bad credit personal loan is never easy. In fact, many banks and lending companies choose individuals with good to excellent credit.
In case you have low credit history, you will be automatically known as a “high risk” borrower.
Your repayment capability can be surveyed depending upon your credit history along with the information in your credit score. Nevertheless, it really is easy to find lenders who are ready to provide bad credit loans for people who are credit challenged.
If you are in the same situation, consider the following tips on how you can get approved for a bad credit personal loan:
1. Order a copy of your credit report.
Order your report from each of the three major credit bureaus. If you have not received your free credit report for this year, you can request for your free annual credit report from www.annualcreditscore.com. Carefully evaluate your credit report to make sure that all information are correct. If you find errors in your report, you can ask for corrections so you can improve your credit score before submitting your loan application. Even the slightest improvement in your credit score can make a big difference in getting approved and in the interest rate you can get.
2. Consider other options.
Can you borrow from a relative or friend? IF yes, then it is a better solution than acquiring a bad credit personal loan. You can surely enjoy a much lower interest rate if you borrow from someone you personally know. To avoid complications, put everything into writing including the interest rate and the repayment terms.
3. Check out your bank or credit union.
You are most likely to acquire a bad credit personal loan with a lower rate from a credit union than with a commercial lender. You should also ask your personal bank if you can be granted a bad credit loan. Since you already have an existing relationship with the bank, you can surely negotiate for a better deal especially if you have been a loyal customer for a considerable length of time.
4. Compare bad credit loan deals.
Do research online and compare bad credit loan deals. However, watch out for predatory lenders who may promise quick approval and incredibly low rates which may turn out ugly later on. Avoid bad credit loan lenders which actually do not have a license to operate and are bound to violate the lending laws of your State. Check out the Better Business Bureau to see if the company is registered as well as the company’s rating and track record.
5. Be careful with Payday loans.
If a payday loan seems like your only option at the moment, you need to be aware about the risks. Keep in mind that you should be able to pay back the loan within 30 days or earlier if possible so you can avoid the extremely high interest rate associated with this type of loan. If you fail to pay your payday loan on your due date, you could be stuck with an even worse debt situation.