Getting a bad credit history is frustrating for many because of delayed payment debts or credit cards they have not paid off. Whenever you use your credit card, make sure you can come up with the money you owed before the bank decreases your credit score. Even credit theft can decrease your credit score if you are not careful in using your credit card.
Since you have a bad credit history, acquiring a personal loan will be difficult. Lenders will always check your credit history before they approve your loan and disapprove of it right away when they see a low credit score. If you currently have bad credit, no need to fret because there are still several ways on how you can have your loan approved.
Clean or Lessen Your Debt
Whenever you use a credit, it merely means that you are borrowing money from the bank until you acquire available funds in your bank account, which they will take out on a given date. But if you keep using your credit card without any money in your bank account, the bank will decrease your credit score. It also means that they will reduce the amount that your credit card can use.
As mentioned a while ago, money lenders will ask for a copy of your credit report before they approve your loan because they need to determine if you can pay them off within the agreed timeframe. Even a past-due account will raise red flags with money lenders, so you need to wipe your debts clean before you apply.
Lenders will also consider your monthly income’s percentage that goes to your debt payments, which is named the debt-to-income ratio. You should have at least a DTI below 50% to get an approved loan from lenders.
A photo of a credit report with a poor credit score.
Put Together a Repayment Plan
Another way to get your loan approved even with bad credit is to choose a lender that will report your loan payments to the credit bureaus, as this can assist you in building credit. When that happens, you could potentially get a lower rate the next time you apply for a credit card or borrow money. However, your credit will either improve or worsen depending on how fast you can pay off your debt.
It would be best if you asked questions about terms, rates, and extra fees, so you know what you will owe every month and when you will owe it. Doing so will help you put together a plan to manage your payments. It would be best to make the payments as fast as you can to avoid ruining your credit.
The tips mentioned are some of the many ways you can get your loan approved even with bad credit. As long as you steer clear from accumulating debts, you will not have any problems getting an approved loan from any money lender you apply to.
