You didn’t start your life with a target of having bad credit. But things happen that you cannot predict, many times there are circumstances that are totally outside your control that cause you to be labeled with the ‘bad credit’ characteristic, such as a messy divorce, high unexpected medical bills, a job layoff, and various other things.
The problem is that there are credit repair companies out there just waiting to take advantage of you. These companies will tell you that they are able to eliminate all bad judgments on your credit report, giving you a clean credit score. Of course, they charge a right for their services, and they do live up to their claims. What they do is contact your creditors and open investigations for everything on your credit report. While these things are in dispute, they’ll be derived from your credit report. This means you’ll actually see a higher credit score. Unfortunately, once the judgments are found to be valid, they’ll go right back on your credit report, putting you back in the same position, but only after you have paid the fees.
You can attempt credit repair on your own, or you can get a reputable credit counselor who’ll help you take on your credit report the right way. Your creditors do need to be contacted. A credit counselor may be in a position to better negotiate lower payments or a settlement payment for you. You will have the advantage of help on your side. This may help you take good care of everything even faster. Just be prepared to work towards your credit repair. You will have to deal with each item and see it through to completion. This means working with your creditors and paying the debts you owe to become current. With a settlement, you can get it removed from your credit report even quicker, but you will need to work together with your budget so that nothing else suffers. In time, you can repair your credit score and maintain it with vigilance and hard work.
And, of course, we must also consider….
But like anyone else, every now and again you need a personal loan. You know you have bad credit so you do not want to go as part of the process of getting rejection after rejection, since that plays havoc with your self-esteem and self-image. You really do not have anything of much value that you own that could serve as collateral, so getting a secured personal loan isn’t much of an option for you, even though bad credit is frequently overlooked or significantly downplayed if you’re putting up collateral on a personal loan.
Digging Up Secrets About Credit Rejection
The key aspect of any application is to make sure what the lenders want to watch is included. If it is, then approved bad credit loans for personal use are much more likely. Sometimes rejection is needed before this is realized.
All applicants try their best to secure their application is successful. However, sometimes it is only after trying to secure a personal loan with bad credit fails that the perfect application can be formulated.
This point becomes clear through an example. Take an application for a bad credit personal loan of $30, 000 over 36 months which has been rejected on the grounds that the income of the claimant ($5, 000) is too small. Repayments of $750 per month might seem okay. However, the 40:60 debt-to-income ratio means the applicant only has $500 spare each month to meet repayments.
But without collateral, think about it what is there about your situation that would make a lender feel comfortable in taking on what seems to be a high risk customer for them, on the basis of the information they’re seeing in your credit report? Or to put it another way, would YOU loan money to you? Even if you do get approved, chances are better than excellent that the interest rate is only going to be one click lower than highway robbery. These again reflects the danger that the lender is taking on you.
To get your best chances of approval for your bad credit personal loan, you should do some homework first. Yes it will take time and effort. However, the benefit of doing this could pay off in spades for you. You first need to have a copy of your credit report from every one of the three major credit reporting agencies. When you get it, review it carefully and file a dispute for any items that aren’t completely accurate. The majority of consumer credit reports contain errors, and when you go as part of the process to get those errors corrected, your credit may not really be as bad as you may think it is.
Next, start shopping for your bad credit personal loan out of the traditional places where you would get one. For example, you’re probably thinking that you should apply at your local bank, your credit union, or even at the loan office downtown. You can do only if you want to. However, your chances are probably better by going with an online lender. Many of the lenders who provide loans online will take the time to consider the reasons you have bad credit, instead of basing their decision only on the numbers they get back from the credit bureaus.
This makes sense because many people who’re labeled with bad credit are in this position due to unfortunate sets of circumstances, and not out of financial mismanagement. Many of these companies will take that into serious consideration, as opposed to your local bank where they’ll simply base their answer on the raw numbers they get from the credit bureaus.
Once you have your loan, be absolutely sure to make your payments on time or even ahead of time. Making timely and consistent payments is going to be your best bet to get your bad credit label removed. As things start improving, keep up with all your financial obligations in a timely manner. This is among the most important criteria for having an excellent credit score, which will get you the best rate on your next personal loan.