If you have applied for bad credit loans in the past to no avail, you may need to change a few pieces of your application to improve your eligibility. Here are a few tips to help you receive approval for an unsecured personal loan:
Improve your credit score: Even though consumers with bad credit can often receive unsecured loans, you may not qualify for any loans if your credit score is too low. Taking time to improve your credit score can increase your chances of being eligible for a loan. The first step in improving your score is requesting a copy of your credit report from the three credit bureaus.
Add a co-signer: When you apply for a loan through a bank or credit union, your lender may encourage you to add a co-signer to your loan agreement to reduce the risk that you will fail to repay the loan. A co-signer would be responsible for your monthly payments if you stopped repaying your loan.
Evaluate your budget: If you are having trouble receiving approval for a considerable loan amount, you ount of money you request through a loan. If you do not make enough money to repay a significant loan, no lender will approve your loan application.
Pay off other loans: If you currently owe money on one or more personal loans or credit cards, lenders may decide that your credit utilization rate is too high to loan you additional money. Additionally, a steep debt-to-income ratio can make lenders hesitant to work with you. Paying off these loan amounts first may give you a better chance of securing a personal loan through an online lender.
Consider a secured loan: Most of the lenders on our list exclusively offer unsecured loans, meaning you do not need to put up any collateral to receive them. However, if you are struggling to obtain loan approval, you may want to apply for a secured loan instead.
Unfortunately, loan scams are relatively common in the online loan industry. You no longer need to go through credit unions or legitimate banks to receive an online loan. Sometimes, it can be challenging to determine whether a lender is trustworthy and honest or is trying to scam you.
Loan thieves can take money from your bank account, sell your personal information, and even steal your identity. At the very least, loan scams can lower your credit score further, decreasing your financial opportunities.
Thankfully, untrustworthy loan companies often have a few tell-tale signs that indicate they are trying to scam you. Here are several ways you can identify bad credit loan scams.
Claims of Instant Approval
No legitimate lender can instantly approve your loan application. Even the most generous lenders need to take time to review your credit history through your credit report and determine your financial responsibility. If a company claims to approve loan applications instantly or sends you an instant approval email, you can assume it is a scam.
Most lenders deduct your origination fees, application fees, and other associated charges from your loan amount. For example, if you request a $10,000 loan amount and must pay a 1% origination fee and 1% application fee, the lender will actually give you $9,800, deducting those fees from your loan.
However, scammers often attempt to make money by requesting that you pay your origination fee and other expenses upfront with cash or a debit card. This request ensures that the scammers receive some money from you before you figure out their deceptive practices.