Having a good credit standing seems a bit difficult especially when you are living from paycheque to paycheque. Traditional lenders and banks sign off on loan applications from borrowers with good credit standing. Approval is out of question if your credit score is not fair. A bad credit rating definitely puts a hurdle. What if you need money for emergency when you are running out of money?
Having bad credit loans approved from traditional lenders is impossible. You have left only one option that is direct lenders. Online lenders are known to approve your bad credit loan application the same day when you put in. Same-day payout and instant approval like claims trickle the fancy of a large number of borrowers. However, it does not mean they cannot turn down your application.
Direct lenders accept applications from all types of borrowers regardless of credit history. Since the online lending has been introduced, getting a bad credit loan has become possible.
Here is how you can get these approved from your direct lender.
Check your financial condition
The aim of bad credit borrowers is to fund your unforeseen expenses. If you have an emergency and you are running out of money, you can take out a loan with direct lenders only. However, they will want to get their money back. You should try to make efforts to have enough income to make the lender believe that you can easily pay off the debt. A direct lender takes into account your income sources to analyse that whether you will be able to repay the debt or not. Having a good income source can help you get a loan easily. You should try to increase your income sources. Try to do a part-time job or freelancing. In fact, you can have a side gigs such as waling a dog, cleaning houses. The more income you have, the higher the chances of approval will be.
Review your credit report for accuracy
A bad credit loan means you will likely end up paying high interest rates. However, these interest rates are likely to go up higher if your credit score is very poor. If you are taking out a loan, you should be aware of your credit rating. Chances are you will find errors in your credit file. Contact credit reference agencies – Experian, Equifax and TransUnion and ask them for your credit report. You can get it free of cost once a year. Peruse your credit report to see if there is any error. Mae sure that report does not consist of a default that you do not recognise. This may account for very poor credit score and a lender may turn down your application. Be careful with your personal details such as address and contact number. The lender may reject your application if it shows any mistake in your contact details.
Look over your repayment potential
It is paramount that you do not apply for a loan that you cannot afford. Some direct lenders turn down your application as they suspect that your credit need is higher than your affordability. Before you put in the loan application, you must ensure that you are not borrowing money beyond your affordability. The best method is to make a budget to analyse your monthly spending and incomings. Make sure that you have a net worth after deducting all of your monthly expenses as you will use this money to pay off your debt.
Arrange a guarantor
Short-term loans do not come with obligations such as guarantor and collateral, but direct lenders do not discourage you from arranging a guarantor. Having a bad credit loan approved at lower interest rate is possible only when you arrange a guarantor with a good credit rating. Sometimes direct lender doubt on your repayment capacity and cast aside your loan application. Despite a bad credit score, you can get a loan approved quickly by arranging a guarantor. It mitigates the risk of a lender and hence they do not mind lending you money at lower interest rate. In case, you commit a default, the lender can call upon a guarantor to pay on your behalf. However, remember that a guarantor is obliged to pay off the debt when all methods of recovering money from you get exhausted.
The bottom line
Applying for a loan in hurry is not a good idea. A loan with bad credit comes with high interest rates. Make sure that you do enough research to choose a lender who provides best deals according to your budget. Beware of hidden fees. Some borrowers apply for a loan with bad credit through a broker. They provide you with a wide range of options. You may think that you have chosen a good deal, but you will end up paying brokers’ fees. Choose a direct lender who does not charge upfront fees.
