How Do Personal Loan Interest Rates Work?
When it comes to borrowing money, a personal loan is one of the most flexible financial tools that meets various needs. Whether it’s a sudden
Every time you need to take out a loan from a bank or any other lender, you will be asked about your credit score. However, a bad credit score should not prevent you from fulfilling your emergency cash needs.
So can you get a personal loan with bad credit? If so, how to get a personal loan with bad credit? In this guide, we will reveal some really effective tips to acquire a personal loan with bad credit. Read on to improve your chances of personal loan approval with a bad credit score.
Yes. You can definitely get a personal loan with bad credit. There are many online lenders that offer bad credit loans to aid borrowers of all kinds. However, these loans come with higher APRs due to the risks involved for the lender.
You will also be offered a lower loan amount and a shorter loan repayment period if you have a bad credit score. Continue reading to find out how to improve your chances of acquiring a personal loan with bad credit.
Before applying for a personal loan, it is important to review your credit rating so you can make sure that you’re complying with the lender’s minimum credit score requirement.
Credit scores start from 300 and go all the way to 850. A credit score between 300 to 549 is considered bad. However, every lender has a different definition of a “bad” credit score. For instance, many lenders consider a credit score of under 550 bad.
So it’s better to pull your complete credit report from Experian, TransUnion, or Equifax to review your credit score. This is the same report that your lender will also review when considering your loan application.
After reviewing your credit report, follow these steps to get a personal loan with bad credit:
The first step towards acquiring a personal loan with bad credit involves reviewing your monthly income. Review your income to find out how much you have left every month to pay the loan payments.
You should also calculate your debt-to-income (DTI) ratio to determine whether you’ll be able to repay your loan. Your DTI represents the percentage of your income that goes towards your debt payments.
Your lender reviews both your monthly income and your DTI to determine your creditworthiness. Most lenders prefer a DTI of below 50% as it reassures them that the loan will comfortably fit in your monthly budget.
Once you have reviewed your monthly income and DTI, use a loan calculator to find out your monthly payments.
By entering different loan terms, amounts, and annual percentage rates (APRs), you can find out what loan amount, APR, and loan term you’ll need to get a loan that you can afford.
Now the next step involves comparing lenders that offer bad credit loans. Every lender has different requirements for borrowers. So make sure to compare multiple lenders to find the one that meets your needs and budget.
To compare lenders, check their qualification requirements, such as their minimum credit score and DTI requirements.
You should also compare the APR and the loan terms they’re offering with other lenders to make sure you choose the most affordable option. Personal loan APRs range from 6% to 36%. If you have a bad credit score, your APR will usually be on the high end.
Bad credit loans also have a cap on the loan amounts offered. Not many lenders will offer you a higher amount if your credit score is bad.
So make sure to prequalify for multiple lenders to find out the loan amounts offered and the exact APRs and loan terms you’ll get. A pre-qualification would only result in a soft credit check. So your credit score will remain unaffected.
Once you have prequalified for multiple lenders and picked an offer, gather all the necessary documents and formally apply for a bad credit loan.
You’ll need your government-issued ID, Social Security number, utility bills, W2 forms, pay stubs, bank statements, and federal income tax forms.
You can either apply online within a few minutes or head on over to a loan provider near you to apply in person.
If your credit score is lower than 550, it can be pretty hard to acquire a personal loan. Not many lenders would be willing to offer you a bad credit loan.
However, there are a few tips that can help improve your chances:
Now that you know how to get a personal loan with bad credit, it’s time to apply. For bad credit loans, apply today at Cash in Minutes. We are one of the very few lenders in Utah offering bad credit loans to anyone in need. So don’t let a poor credit score hold you back.
Fill out your form today and our team will do everything they can to help you get that funding the same day!
Smooth and protected, embark on a fast track to a cash loan with simple steps. Access your funds promptly!
Questions or need assistance? Our dedicated team is here to help you with all your cash loan inquiries. Contact us now!
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