Even small personal loans have to go through specific qualifying processes. Your main qualifier is your current credit score. It is a good indicator of how reliable you are in paying back loans and at what rate. Many decent credit scores are within the 580 to 620 range and higher. Those below that range may not get approved.
Even with bad credit loans available, the actual loan amount you can get is too low for your goal. If you intend to take a personal loan with a less than decent score, read on. We have a few handy tips that can help get your loan approved in no time.
Is your Credit in Good Shape?
The first step is to clear all current credit liabilities that will affect your credit score. These payables are from major banks and lending institutions. They forward your credit-paying activities to credit report agencies, directly lowering credit ratings. Pay more on credit cards and previous small personal loans to gradually increase and improve your credit rating.
If you manage to settle most of your debt, it will bump up your credit score and improve your credit utilization score (CUS). The CUS indicates how much you are using from your total available credit. Your updated payment history and the CUS make up 65 percent of your total FICO score. Working on both will greatly improve your next loan application.
Next, look for any errors in your credit report. Even old scores that were already settled might not be updated on credit reports. If the card or account was closed after, old information might still exist, adding to lower credit scores. You can check your credit report at AnnualCreditReport.com for free. Send them proof of your correction claim, and they will update your credit report.
One good solution to many different credit worries is to get debt consolidation services. The way it works is a debt consolidation company will take over and pay for all your debts. It instantly ends your debts and raises your credit score. You’ll only need to pay a smaller monthly installment for the total amount over a planned duration.
Add Extra Income
Extra income can come from selling off your properties and possessions. Consider clearing some of your luxury items to add a large portion to your earnings or pay off debt. If not, get contractual or part-time work to raise extra funding. It’s a good financial boost and may even add to your needed loan amount.
These actions will increase your declared annual income, pay off other loans and debts, and increase your DTI or debt to income ratio. Your DTI is the total amount of loan payments from your total income. These items are other ways to add to your qualifying requirements for many lenders.
Consider a Smaller Loan
If it’s workable, get a much smaller loan first. You can address an immediate financial need while making your loan more realistic and easy to pay back.
In case you need a bigger loan amount, look for lenders that accept a guarantor who can back you up financially just in case you come up short. Your guarantor has to be in a position to answer part of that loan you can’t complete.
Conclusion to Personal Loan Approval
Sometimes, your credit history, rating, or score is the only thing standing in your way to getting a good loan. You can either improve it first, resolve it, or look for alternative loan options. Knowing these factors and working on them also gives you a good lesson about solving debt issues smartly.
If you badly need a personal loan, we at Mid-Town Finance Company BHM are here to help. We offer quick ,personal loans for those with bad credit in Birmingham, AL released on the same day. Contact us today to resolve your financial worries fast!