Having no credit history or having a credit history with less than a 650 credit score can hamper a person’s ability to get a financial loan. While it is possible for someone with a bad credit rating to get a loan, the interest rate will be higher than for someone with an average or good credit score. Someone who has a need for a personal loan and is afraid that a bad credit score will limit or eliminate any chance of being approved can help improve the approval process by doing some preliminary work.
<strong>WAYS TO IMPROVE LOAN APPROVAL PROSPECTS</strong>
Individuals with bad credit scores can help improve their loan prospects by:
1. Getting a copy of their credit report and analyzing it for errors or inaccurate information. A person can provide corrective information to the credit bureaus. If there are no disputes about the information, the credit reports will reflect the new corrective information within 30 days.
2. If possible, pay off a few of the outstanding accounts. The creditors will report the pay off to the credit bureaus and that will raise someone’s credit score.
3. Write down an explanation of what situations caused the current low credit rating. Life is full of unexpected events that can negatively impact a person’s financial situation; but as people strive to overcome those events and work to manage their current responsibilities, there are financial institutions that will offer second chances. A person must be prepared to explain about the loss of a job, unexpected large medical expenses, or even the necessity to declare bankruptcy impacted his finances. The person must also to be prepared to explain how the loan will be used and how the payments will be made on time.
<strong>APPLYING TO FINANCIAL INSTITUTIONS</strong>
Before individuals try to get loans from quick cash, very high interest rate, lending companies, they can try the following:
1. See the loan officer that their primary bank where they have checking and savings accounts. If a person has been a long time customer, the bank may be more understanding of a financial rough patch. Also, if a person has a five figure savings account, the funds may be used as collateral for a loan.
2. See the loan officer at a credit union. Credit unions are smaller financial institutions and often have more flexibility in their lending rules that may allow for less than stellar loans that larger financial institutions will not permit.