Do not also be disappointed when you have a hard time getting approved for a loan because there is never guaranteed approval. Most salespeople and advertisers will market loan products as 100% guaranteed approval, but this isn’t the case. What they really mean is that the lenders they represent consider other options beyond credit scores. Some of these may include employment status, outstanding debts, and other factors. That means you can still get a loan at a low credit score as long as you have other advantages going for you.
There isn’t a specific amount of money you can expect to get from the application because every application is considered independently. The typical rate for personal loans, however, is 200% of an individual’s annual pre-tax income. In the end, the actual amount will be determined based on a combination of factors.
How to improve your chances of approval
To increase your chances of getting a loan, the first step is to look at different lenders. Doing this will widen your net and you will likely find several lenders open to your loan application. Do not be afraid of hurting your credit score in the process because lenders only perform a soft credit check that doesn’t affect your FICO scores. With your list of potential lenders, you can then choose the one(s) with the best rates and terms of repayments to avoid paying too much in interest.
Some other tips include:
- request for loans under $10,000
- propose a shorter repayment period under 1 year
Both of these strategies reduce the financial obligation for the lender and they would be more willing to give you that loan. If you need more than $10,000, you can request several loans from your list of willing lenders. And remember that a higher interest rate because of a shorter repayment term does not really mean you’re paying more in interest. Even with low interest, lengthy term loans have a higher interest when all the installments are added up. If you have any unused credit cards, these will be an asset because lenders will see these as potential sources of income for repaying the loan.
How about raising your credit score?
The tips above help you to get a loan you really need quickly, but you should always consider the future and start working at raising your credit score. Begin by confirming whether your credit report is accurate by requesting one from any of the 3 popular credit bureaus. The FTC allows you to request one free report every year, from which you can check for any erroneous entries.
If this doesn’t do the trick, start building a better credit reputation by repaying any outstanding debts.
Begin by addressing smaller loans that are easier to handle and this will immediately raise your credit rating. Credit cards can also be an asset rather than a liability because most lenders report card activity. Keeping your card utilization below 30% for a secured credit card will be an advantage for your credit rating and raise your FICO scores.
Staying on top of your monthly payments also works wonders because most people’s credit scores are lowered by late payments over 30 days. Therefore, doing the opposite and paying all your bills on time should make your credit rating higher than it currently is.
Joseph Smith
Writer and editor
Joseph Smith is an experienced freelance writer with over 11 years of experience. His area of expertise includes finance, loans and lending. His work has been featured on various large websites including this one.
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