Tips for Getting a Loan with Bad Credit
Bad credit? No problem! You might feel like your chances of getting a loan are slim, but there are plenty of options available to you. Some people don’t even realize that they qualify for loans with bad credit. Did you know that there are many types of loans out there? There’s the mortgage loan, home equity line, auto-title loan, small personal loans, and more! Read this article to learn more about the different types of loans available to those with bad credit.
How to Get a Loan with Bad Credit
Lenders want to see that you’re making an effort and will take steps to help bring your credit score up. You can do this by paying off some outstanding balances, bringing down the debt owed on revolving accounts (like those with a balance carried from month to month), and showing financial responsibility by maintaining all of your existing payments. If your credit is really bad, lenders may even consider including a cosigner who has good or excellent credit as part of their loan agreement. This person would vouch for you and be responsible in case you default on the loan!
Good credit is required for many loans. If you’re looking at a loan with the best interest rates, like an FHA-insured mortgage or conventional fixed-rate home purchase loan, lenders will usually require that your debt to income ratio be under 35% in order to qualify. Don’t let this discourage you though! Be realistic when it comes to how much money you owe and take steps towards getting back on track if possible by paying down some of your outstanding balances so that they are relatively low compared to the amount owed. Another option is applying for unsecured personal lines of credit which can help improve your score while borrowing within your means (and only what’s necessary).
Just because bad things have happened in the past doesn’t mean that it’s always going to stay that way. If you’ve found yourself falling behind on bills, not being able to keep up with payments, or have had other financial difficulties, know that there are options out there!! Your bad credit doesn’t have to hold you back from getting a loan. With a little bit of research, you can find the right loan for your situation.
The most common types of loans with bad credit include small personal loans, auto-title loans, mortgages, and home equity lines. These are all available for those who need help but do not have the financial resources necessary to qualify on their own!
What Loans Can You Get with Bad Credit?
There are many different loans available to those with bad credit! Here’s what each type entails:
A mortgage is typically taken out when purchasing property in order to build equity over time. The most common types of mortgages include FHA-insured loans and conventional fixed-rate home purchase loans. Lenders will require a credit score of at least 620 for these types of loans.
Home equity lines, also known as HELOCs (home equity line of credit), allow you to borrow against the available value in your home – up to 80% or more – and can be paid back over time with interest. This is not a loan that is typically taken out all at once but instead withdrawn from as needed using an automatic payment system linked directly to your checking account! You can also use a home equity line as collateral for other types of loans. Most lenders will require that your credit score be at least 620 to apply for this type of loan.
Small personal loans are those under $25,000 which might cover something like buying a computer or consolidating high-interest debt elsewhere such as on outstanding balances owed on revolving accounts. These small personal loans may have higher rates than other types of larger-scale borrowing options due to the risk associated with lending smaller amounts of money.
Auto-title loans, also known as car title loans or pawn shop loans, are secured by your vehicle and allow you to borrow up to $15,000 (or more) based on how much equity is available in your vehicle – typically 80% or more can be borrowed against! These types of loans do not require any credit checks but those who have poor credit will likely receive higher interest rates than others due to increased financial risk. This type of loan may only take a couple of days at most for approval which usually requires that your auto insurance policy be updated as well. One last option if things seem really dire is borrowing from family members or friends directly but that there might be some awkwardness if you are unable to pay them back so it’s best to try borrowing from another source first before resorting to direct family members or friends.
An unsecured personal line of credit allows borrowers access to funds that they can borrow through their bank or financial institution which does not require any collateral (such as an asset). Borrowers need only apply for this type of loan online and will be approved based on income verification provided by the lender, previous payment history presented on existing accounts, and other factors such as credit score and debt to income ratio.
These are just a few examples of loans that people with bad credit have the opportunity to apply for! There are plenty more out there so be sure you do your research before applying. Remember, lenders want to see that you’re making an effort and will take steps towards helping those who show this kind of responsibility. Showing financial responsibility by maintaining all existing payments is also very important as well as paying down some outstanding balances if possible in order to improve your chances of getting approved no matter the type of loan you’re looking into (whether it’s one mentioned above or otherwise).
If you need a loan but don’t have good credit, do your research and find out what options are available to you. Even if the interest is higher than that of someone with better credit, at least you’ll know that there’s a light at the end of the tunnel!
