How to Get a Loan With Bad Credit
A lot of people make financial mistakes that affect their credit for the worse. Despite warnings that bad credit will discourage lenders from issuing loans, there are a number of lenders who specialize in loaning money to people with bad credit... Read on to learn how you can get a loan with bad credit...
Step 1: Circumstances
Your options are based on your credit history, and some circumstances may limit you more than others. Circumstances that affect your chances for obtaining a loan include:
Credit score:
A credit score of 580 or lower will severely limit your options.
Multiple credit checks:
Checking your credit score too often can affect your credit rating.
Creditor malfeasance:
If you have recently filed for bankruptcy you may only be able to get a high-interest loan or a restricted credit card.
Recent Credit card and previous loan default on your record...
Step 2: Loan Options
Depending on the severity of your circumstances, you may be eligible for one of two things:
An unsecured personal loan
A restricted credit card.
Both of these options come with very high interest rates, which may only increase your debt. High interest rates will skyrocket your monthly loan payments, which could result in surpassing your credit limit if you are unable to pay more than the minimum due. Surpassing your credit limit means penalty fees, and before you know it, your monthly payments become completely unaffordable and you are right back where you started...analyze the following factors:
...Determine how much you can afford to pay back each month.
Avoid making only minimum payments.
Only borrow what you can afford to pay back quickly.
Step 3: The Application Process
If you are applying through a bank...Be sure you have all of the necessary documents and information handy:
Driver's license
Social Security number
Evidence of assets (i.e. property deeds, vehicle titles)
Income documentation
Be sure to examine the terms of the loan, and...negotiate the interest rate so your monthly payments are affordable. Before signing the application, be sure that all of the terms of the loan are terms you agree to so that there are no surprises later. Again, you will want to examine the expected monthly payments and only borrow what you can afford before you sign anything.
Step 4: Getting a Business Loan With Bad Credit
Many people dismiss the idea of getting a business loan because they feel their credit score will deter them from starting that new business. First and foremost...sit down with a financial adviser and determine your options. If your credit is poor and there is recent evidence of creditor malfeasance on your credit report, you may not be able to obtain a business loan...
Step 5: Getting a Car Loan With Bad Credit
There are a number of bad credit lenders in the United States who are more than happy to extend you the funding you need to get a car. As with any other loan, you will need to present the proper documentation, such as income history and credit score information before you can get approved...
Step 6: Borrowing Outside the Bank
Not everyone has the luxury of friends and family with a little extra money to lend, but this is definitely an option to consider. If you are unable to get a loan from a financial institution, look around at the people in your life and evaluation whether or not one of them may be able to help you out. Consider the following options:
Friends Family Your employer
Step 7: Turning Over a New Leaf
It is important when you meet with the lender that you demonstrate the efforts you are making to turn over a new leaf. One surefire way to do this is to only borrow what you need... You may also want to consider showing them your efforts to clear up any debt you may have accrued that put your credit in poor standing...
Part of turning over a new leaf means doing everything in your power to live within your means, and to make sure you make every effort to repay your loan in a timely manner.
Conclusion
During difficult financial times, there is still hope of getting a loan—even if you have bad credit... Some circumstances, like an extremely low credit score or a recent bankruptcy, may make it difficult for you to get a loan. In some cases, a high-interest credit card with restrictions may be your only option.
When you meet with a lender, bring all of the required documentation with you. After filling out the loan application, be sure to review the terms of the loan so there are no surprises later. Above all, use this opportunity to rebuild your credit. Stay on top of your payments and do everything in your power to get the new loan paid off in a timely manner.
Source: http://www.mahalo.com/how-to-get-a-loan-with-bad-credit accessed December 20, 2009
